Masking Image

17.08.2022

Managing the Cost of Living Crisis as a Small Business

The cost of living crisis is a growing concern. Small businesses are struggling to make ends meet, and it's no wonder—the cost of living has been increasing at an alarming rate. But there are ways to safeguard yourselves and your business. Our expert financial team have outlined some ways to do this.

Know your expenses

Write down everything that goes into running your business, such as the costs of office supplies, utilities or payroll, and set aside money each month for them. Once those expenses are covered, and you’ve got the money set aside, think about what other expenditures are coming up in the next few months. Are there any big purchases on the horizon? Are there any significant investments that need funding? Will other factors impact how much cash flow will be available?

Having a thorough understanding of your current expenses means that if you need to, you will more quickly and effectively be able to reduce spend with minimal impact to your business.

Build a forecast

Next, build a forecast. This will help you understand how much money you’ll need over the next six months, as well as give you an idea of how much revenue your company will likely bring in over that period. If you find that things are not to plan, revenue is less than anticipated, or expenses are higher than planned, you can adjust your plan accordingly.

An outsourced accountant can help with building a forecast and oversee your business activities and accounts to ensure that all is in order. Visit here for more information on accounting and bookkeeping services in Swansea.

Manage your cash flow

Your cash flow is a crucial indicator of how well your business is doing. Your cash flow statement shows how much money is coming in and going out over time. If there’s not enough money, you’ll need to look at ways to bring in more income. You might need to raise prices or find new ways to sell your products or services.

Managing your cash flow is an essential part of running a business. It’s important to review your payment terms and get your cash in more quickly to improve your process for chasing up debtors. You should also ensure that you’re getting the right amount of money from customers on time – this will help ensure you don’t run out of cash before payday!

Using an accounting software such as Xero is crucial to ensure that you are maximising efficiency and promoting accuracy in your business accounts. This revolutionary software has many features, enabling you to run your business on the go all in one cloud based solution. To discover more about how Xero can help your business, click here.

Look at funding options.

If you require a cash flow boost, or are looking to fund further growth plans amidst the cost of living crisis, you might be eligible for business finance. Many different types of business finance are available, including grants, loans, and equity investment.

Grants are funds provided by the government or charities to help with the start-up costs of a new business. Grants are often awarded on merit and may be competitive. Loans can be used to purchase equipment and premises or fund expansion plans. They are usually secured against assets such as property or vehicles, which can also be used as security for an overdraft if required. Equity investment is where investors buy shares in your company in return for capital that will enable it to grow. The shares can then be sold at any time – although there may be restrictions on their sale during the first few years after their issue. To learn more about grants in Wales, visit this link.

Speak to an accountant

A great way to help your business succeed is by working with an accountant who can help you navigate the financial landscape and make informed decisions about your company’s future. Accountants help you find ways to reduce your overhead and will always be looking for ways that you can save money, whether through tax planning or through reducing taxes owed, in a way that works for your unique situation.

Finding an accountant who you feel understands your current financial situation and your business’ goals means you can work alongside them to build a strategy to get you through the cost of living crisis.

 

To talk to our team and see if we can help you and your small business, please contact us here.