Autumn Statement 2023 and seven key developments and their Impact on businesses.

​1. National Insurance Adjustments: A Relief for Employees and the Self-Employed The government has announced a reduction in National Insurance contributions for employees by 2%, affecting approximately 27 million people, effective from January 6, 2024. Additionally, the abolition of class 2 National Insurance will benefit self-employed individuals, saving them around £192 annually. Moreover, class 4 National Insurance will be reduced from 9% to 8% for earnings between £12,570 and £50,270. 

2. Corporate Taxation: Maintaining the Status Quo, The increase in Corporation Tax, from 19% to 25% for profits exceeding £250,000, will continue. To stimulate business investments in technology, equipment, and plant & machinery, full capital allowances will be fully deductible.  

3. Inflation Trends: A Positive Shift In a significant economic turnaround, the UK saw a drop in inflation to 4.6% this October, a notable decrease from the staggering 11.1% at the beginning of the year. While this reduction signals a positive shift, the government's forecast indicates a gradual path to the target inflation rate of 2%, anticipated to be achieved by 2025.  

4. Economic Growth and Recession Concerns the Office for Budget Responsibility (OBR) had earlier projected a recession in the UK. Contrasting this, the Chancellor recently expressed a more optimistic outlook, expecting the UK economy to grow by 0.6% this year. Furthermore, government debt has seen a reduction from initial forecasts, alongside a decrease in borrowing costs. From 2024, the UK economy is expected to witness a growth phase, offering a ray of hope for businesses and investors.  

5. Employment Incentives The employment allowance will continue at the elevated level of £5,000, providing further support to businesses.  

6. Capital Gains Tax: A Notable Change Beginning April 2024, the 'annual exemption' amount in Capital Gains Tax will be halved from £6,000 to £3,000, a change that businesses and investors need to prepare for.  

7. Additional Economic Measures

1. The government has committed an additional £50 million to boost apprenticeships across the UK.
2. Alcohol duty will remain unchanged.
3. The State Pension will see an 8.5% increase from April 2024, adhering to the triple lock policy, a crucial support for many vulnerable pensioners.
4. The Minimum Wage is set to increase to £11.44 per hour from April 2024, applicable to all workers aged 21 and above.

These developments reflect a blend of challenges and opportunities for UK businesses. While some measures, like the reduction in National Insurance and the retention of the employment allowance, offer immediate relief, others like the changes in Capital Gains Tax and Corporation Tax require strategic planning. The overall economic forecast, however, paints a cautiously optimistic picture for the coming years.

​Grants and loans are both mechanisms to secure funding, but they differ significantly in terms of their structure, purpose, and obligations. ​

​
Here's a comparison:
1. Definition:

• Grants: Funds that are given to individuals, businesses, or entities for specific purposes, and typically, they do not need to be repaid. They are often provided by governments, foundations, and non-profit organizations.
• Loans: A sum of money borrowed that must be repaid over a specified period, usually with interest. Loans can be obtained from banks, credit unions, private lenders, or governmental entities.
  
  

2. Repayment:

• Grants: Generally, grants do not need to be repaid. However, there might be conditions attached, such as completing a project as described in a proposal. If the conditions are not met, the grantee might be required to return the funds.
• Loans: Loans must be repaid by the borrower, typically with interest, over a set period.
  
  

3. Purpose:

• Grants: Often awarded for specific projects or purposes, such as innovations, research and development, community development, or arts programs. They're not provided for personal use or to cover operational expenses in most cases.
• Loans: Can be used for a variety of purposes, depending on the type of loan. For example, personal loans, business loans, mortgages, etc.
  
  

4. Eligibility and Criteria:

• Grants: Typically have strict eligibility criteria. Applicants might need to demonstrate the feasibility of a project, its benefits to a community, or its alignment with the grantor's objectives.
  
  
• Loans: Eligibility is often based on the businesses \ borrower's creditworthiness, industry the business operates in, affordability, ability to repay, and financial history.
  
  

5. Cost:

• Grants: Usually free, but they might have indirect costs, like the time and resources spent on the application process or project reporting.
• Loans: There's a cost associated with borrowing, typically in the form of interest. Some loans also have fees.
  
  

6. Application Process:

• Grants: The application process can be rigorous and time-consuming, requiring detailed proposals, budgets, and sometimes interviews or presentations.
• Loans: The application involves assessing creditworthiness, financial statements, and sometimes collateral, the business plan, etc. The process can be long or short, depending on the lender and type of loan.
  
  

7. Obligations and Accountability:

• Grants: Recipients are usually required to report on how the funds were used and the outcomes of the funded project.
• Loans: Borrowers must adhere to the repayment schedule and terms. If they default, there might be financial penalties or legal consequences.
  
  

In summary, while both grants and loans provide funding, grants are generally non-repayable funds awarded for specific purposes, and loans are borrowed funds that need to be repaid, usually with interest.
 
To learn more or if you are interested in a business loan or business grant, please contact RBSS Consulting Ltd on 033 33 55 1696 or email us on [email protected].

​
To help to get inflation back down; on 3 August 2023, the bank of England raised our interest rate (Bank Rate) by 0.25 percentage points to 5.25%. This is its highest level since February 2008. This has a huge impact on businesses, most especially small businesses which are often dependent on external finance for growth and investment. The increased cost of borrowing therefore makes it more difficult for them to get help to raise finance they need to thrive. Hence, such businesses need to be more proactive and strategic in their financial management to keep afloat. Here are five specific steps and strategies they can implement:

1. Monitor Cash Flow: Many businesses especially small and startup businesses can easily make the mistake of focusing more on getting more customers and lose sight on their cash flow and identifying areas where it can be improved. Implementing efficient bookkeeping and collection processes to reduce outstanding receivables and ensure a steady inflow of cash in paramount. This includes reviewing all existing loans and debt arrangement strategies and monitoring and reducing non-essential expenses without impacting on the quality of services and products.

 

1. Focus on Customer Loyalty: It is easier and more cost-efficient to retain existing customers than to acquire new ones. Hence, prioritize customer service satisfaction and retention. Loyal customers can provide a stable revenue base and act as brand advocates, especially on social media; such as You Tube and Facebook, including word of mouth and therefore reducing the need for costly marketing to new customers.

 

1. Negotiate with Suppliers: This is most effective with long term suppliers. Engage in negotiations with suppliers to secure better terms and a wider time frame in witch to repay and if possible attain credit. This can potentially reduce costs and give the business time to build up profits and also improve cash flow during times of higher interest rates.

 

1. Boost Marketing Efforts: This may sound like a contradiction to point 2, however it’s not. A lot of small businesses claim they don’t have time for social media. Post-covid has proved this area to be the more unavoidable for businesses to attain effective business growth plans. With a large percentage of people working from home, businesses are forced to invest in targeted marketing campaigns to attract new customers and expand the business's reach. This is where Digital marketing, social media, and other cost-effective channels; such as Facebook, you tube, TikTok, LinkedIn etc are of importance. Take them seriously, investigate which is a better channel for your kind of business and take action.

 

1. Seek Professional Advice: Consult with our financial advisors to gain insights into industry-specific strategies and solutions and keep abreast of the changes in the economy. This gives you the opportunity to focus on what matters to you most which is your business. It is our responsibility and role as Business and Financial Advisors to Keep abreast of the economic indicators and interest rate trends as they unfold, monitor the business news, changes and updates from government and banks including the Bank of England to anticipate future changes and how these changes impact on your business, both in the short and long term.

 
 
By implementing the above business improvement strategies and maintaining a proactive approach to financial management, small businesses can rise above the challenges of the rising interest rates and position themselves for long-term success and growth.

If you need help in any of the above pointers or others regarding the rise in interest rates, give us a call today on 0333 355 1696 or send us a message at [email protected].

RBSS Consulting Ltd have teamed up with ANNA Money.

You shouldn’t have to wait hours to speak to your bank. That’s why we have teamed up with ANNA Money who have a team of award-winning customer service agents based in Cardiff. They’re online 24/7 every day, including Christmas Day.

ANNA Money is the business current account for start-ups, small businesses and sole traders. You even get free Bookkeeping software for UK small businesses and sole traders with it.

Account set up takes less than 10 minutes, and your business debit card will be on the way the same way. Try ANNA for free, starting today. Simply follow the link below. It’s safe and secure.
​

• Click here for a Business Bank Account:
• Click here for Bookkeeping software for UK small businesses and sole traders

 
Save time and save money. Sign up now.
 
FCA Regulated and your money is protected. See video to see how you are protected.

 
Save time and save money. Sign up now.

I am struck by how many of the business owners I meet that do not consider this, and when I raise the subject, they usually tell me that they are relying on a private rental property and a modest pension for their retirement with no further access to finance.

They do not see their business as a saleable asset but as a source of cashflow that will have no value when they stop working
And so often when I look at the financial structure of their business, its only assets are the debtor book, (some of which isn’t collectible), creditors at about the same value as the debtors, some cash in the bank and equipment and stock which would fetch less than book value if sold off.

It’s therefore true, such a business is really not saleable, just something to close down and walk away from; as do 250,000 other UK small businesses owners every year for this very same reason.

However, majority could be sold for a six or seven figure sum if managed differently
Such an amount would transform the owners’ retirement finances from ‘getting by’ to luxury.
Yet I get strong objections to the above proposition such as, “this business is all about me, so it isn’t saleable”

I politely disagree with the above and put it to you that any and every business is saleable  
How?
Well, it is instructive to first look at big businesses, which are all about money and return of investment (ROI) to see what they do. The aim is to not to be as ruthless as them but to learn for free what you can adapt.

Here is what they do (just in their financial management stream – there are 4 others*):

1. Measure financial performance which we call a Business Valuation, Performance and Health Check constantly, comparing each month of the current year to the same month of the previous year to understand what’s happening, why it’s happening and to devise corrective action whilst there is still adequate time.  
2. Manage cashflow to ensure they collect quickly and pay slowly  
3. Focus to improve profitability and business sustainable by implementing growth strategies and suppressing costs through sales, pricing and cost control strategies  
4. Manage assets to minimise the money tied up in them and ensure that each generates a ROI. If not, get rid of it. Areas to consider are: post the corona pandemic, such as; do they still need an office space? Is it more cost effective to outsource manufacture?  
5. Funding working capital, not by borrowing but by invoice discounting, asset finance or equity funding

1. Budgeting & forecasting to decide in which direction they are going by way of business planning and modelling
   
2. Financial reporting systems that show weekly/monthly early trends and forecasts for action now  
3. Management accounting to review on a monthly basis per year in depth what the annual accounts will look like in time enough to manage the outcome  
4. The Finance Acts compliance by getting their business accountants to check them over before each year end  
5. Tracking financial ratios to watch the trends and forecasts that predict how their business will perform if not either corrected or reinforced and aligned with their business plan  
6. Financial planning to ensure that the business sets out with a realistic plan of each year’s performance with the resources and business performance strategies​ in place to achieve it  
7. Financial management by staying on top of the plan and changing direction, strategies, and resources where relevant and necessary to get the best available outcome    
8. Buying financial support effectively by knowing who best can provide it and the right moment to call them in, such as a business advisor

At face value, much or all of this sounds time-consuming, costly and bureaucratic. To an extent it is. However, big businesses perform the above actions for the very good reason that it works, knowing that time invested in doing this provides a very good payback and ensures their survival.

And remember, every big business was once a little one whose founders had the foresight to introduce strong business performance strategies and financial management at an early stage.

The average big business sells for 14x pre-tax profits. Yet I have seen small businesses making £50K pa close down for instead of selling as a going concern for £500K+

It may seem that chasing another order or dealing with a customer crisis is a better use of your time. However, it should account for all you do. Appropriate business and financial management would make the orders come in automatically and prevent the customer problem in the first place.

Knowledge is power and good financial management and other applicable actions gives you the power to make smart decisions that will build a saleable business worth millions.

Most of what I have instanced above are not difficult to implement. And if you find this a challenge, your Business Advisor at RBSS Consulting Ltd, Romford will do it for you, helped by low-cost apps.  
​
Please note: not every action mentioned above will apply to your business which is a good reason to call in an experienced and professional Business Advisor for expert guidance. If you can resonate with some of the above points or are in any doubt as to which direction your business is heading in, get in touch with us today and you can be rest assured we will point and lead you in the right direction at RBSS Consulting Ltd.
 
_______________________________________________________________
 
Your first step is for free and takes 15 minutes by  
Booking a free assessment here
to find out how much your business is worth today, what it should be worth, and the actions needed to get it there. All in a comprehensive report tailored just for you. 
Another RBSS Consulting Business Consultant service…
“Delivering Real Business Solutions”
(*The 5 business streams are Marketing; Operations; Systems; People; Finance)
​