3 Business Guides That Can Help Small Business Owners in The UK

As 2021 draws to a conclusion, what should be the festive season is seemingly being haunted by the ghost of christmas lockdown. After a rather optimistic summer and autumn, the onset of the Omicron Corona virus variant (coupled with the annual winter flu season “NHS crisis”) appears to be pushing the British government to consider introducing further COVID restrictions either over Christmas or at least in the New Year.

The uncertainty over the will they/won’t they lockdown, and rising number of hospital COVID admissions, is already having a particularly adverse effect on small business. Many small retailers and hospitality providers make up to 30% of their annual profit in the festive season, and after a rather unhappy Christmas in 2020 they are now bracing themselves for another one as shoppers tighten their belts, and workplaces cancel their Christmas parties.

The impact of further lockdowns could be nothing short of fatal for many British businesses. The last 2 years has been a bit of a disaster for UK based business with the first wave of COVID coming hot on the heels of Brexit – the sad reality is that a lot of small and medium sized enterprises are already struggling to survive. 

Whilst the Government did roll out an extensive business support and furlough scheme in 2020, in most cases it was akin to sticking a plaster on a bullet wound and even this meagre support has now been pulled.

In this post we will take a look at a few ways in which business can either cut costs or raise capital during this difficult period.

1. Sell Equipment and Start Leasing It

One way to raise some capital is to sell off any equipment your business owns and instead lease whatever you need. Selling company assets and tools of the trade may feel like a drastic step, but it can be a highly effective way to raise short term capital. 

There are however also some strong arguments to be made in favour of leasing equipment. Firstly, taking out equipment on lease gives a business the chance to get hold of state of the art, latest generation equipment rather than being stuck with a coffee machine or printer that is 5 years old and already starting to splutter. Also, lease payments are often lower than loan repayments so before you ever take out a loan to buy assets, you should at least consider leasing it instead. 

Of course, the disadvantage is that you never own the equipment but then again, if you buy it using a loan, by the time you repay the loan, the piece will probably be well on its way to obsolescence and due for replacement.

Finally, a major advantage of leasing gear is that you are protected for breakdown and damage. If an asset you own breaks then you are responsible for getting it fixed whereas almost all lease providers include customer support and breakdown repair as standards in their policies. 

Check out this useful guide to leading business equipment for more details and more pros and cons.

2. Invoice International Clients Through Multi Currency Accounts

In this globalised, post internet business era, more and more small businesses are transacting internationally and even the most humble of enterprises are either selling their wares to the world or else using offshore support.

You may already know that whenever you send or receive money internationally, you will be charged a transaction fee by both your and the recipient’s bank. Further, you will also be at the mercy of the bank’s exchange rate – they choose what rate to apply, they will use one that favours them, at your expense and there is nothing you can do about it. By the time your bank has changed your pounds into euros and levied its handling fees, a business can easily be out of pocket by a few quid or a few hundred.

One way to mitigate this is to open, and use a multi currency account. Multi currency accounts basically allow you to split your cash into different sub-accounts or pots in a number of different currencies. For example, you could choose to keep £50,000 in your main account and then a balance of €10,000 in one pot, and $5,000 in another. 

The advantages are that you don’t need to worry about changing currencies and being charged an unfavourable exchange rate every time your business makes a transaction in the selected currency as you already have the currency. Multi currency accounts also protect account holders from fluctuations in the exchange rate and with an increasingly  uncertain pound sterling, this gives business some assurance.

However, note that even with a multi currency account your bank may still charge the transaction fee for sending or receiving money outside of the UK. If you are regularly  invoicing international clients from the UK into a handful of currencies, this is a great step to help save your business money.

3. Use Digital Tax Services Rather Than Expensive Accountants

Accountants generally do not come cheap and most businesses know too well that the pain from receiving their annual tax bill is second only to realising just how much their accountant is charging them for preparing their annual tax bill. In many cases, any tax money “saved” by creative accounting are quickly eaten up by the accountants’ creative billing. 

But this is the way it has to be right? Afterall, tax is kind of taxing right and best left to the experts? In some cases this is quite true but a lot of small businesses have fairly straightforward tax profiles and don’t really need a dedicated corporate accountant. In an attempt to simplify and streamline the tax process, HMRC introduced their Digital Tax services in 2019 which is intended to make it easy for all businesses to do their own accounting using a digital tax service. Using the Government Gateway site, businesses simply have to enter the requested income and outcoming information and the online calculator tells them exactly how much they need to pay.

Bring on 2022?

So there we have it. The Brexit-COVID uncertainty looks set to continue well into 2022 and sadly, business is once again going to bear the brutal brunt of it. Whilst there is no magic  bullet for the challenges faced, and no sign of a silver lining anytime too soon, at least there are some small steps that small businesses can take to save costs, raise capital and hopefully ride out the end of the pandemic once and for all.