On the money?
On the money?
Headline Partner • Summer 2022
Just when you were coming out the other end of the economic fallout from a historic pandemic, here you are facing a bunch of other, even bigger, challenges – right?
Interest rate rises, the biggest cost-of-living crisis for half a century, supply chain instability, economic volatility, and the ripple effects of a war in the heart of Europe.
So, what can businesses like yours do about all that?
Our Founder and MD, Darren Peacock, considered the root causes of this ‘perfect storm’, and offered some practical tips for weathering it.
“Volatility is difficult for businesses to handle at any time, but many now have the added problem of weaning themselves off COVID-related government support,” he said.
“While there were winners from the extensive pandemic handouts – who received furlough payments for their staff and non-repayable grants, others faced dire straits because their services were outlawed and they only received a temporary reprieve in the form of bounce back loans or VAT payment holidays, which are now being called in by HMRC. All this means they don’t just have to maintain profitability amidst market turbulence, they have to make extra on top to repay what they owe.
“At the same time, the uncertainty means other types of creditors are more risk-averse too, making finance generally more costly and difficult to come by.
“We’re seeing a steady trickle of firms entering administration because they can’t make ends meet.”
However, there is a relatively simple answer.
“The mantra I always live by is ‘know your numbers’,” added Darren.
“Amidst the current turmoil, businesses need to have an up-to-the-minute handle on everything from costs to profit margin and cash flow, and be able to react fast to their internal situation and external market shifts.
“Things are changing daily so, although it’s difficult to predict all eventualities, by watching the news and listening to economic pundits, you have a better chance of identifying what actions you need to take to shore up your balance sheet.
“You need to be 110 per cent sure everything you’re doing is making you money, or you’re going to get into trouble. If you don’t put your prices up, you’ll lose money due to the increasing costs of labour, fuel, energy and raw materials.
“Don’t fear doing that either because, while there is a risk you might lose some customers, not doing so is guaranteed to be 100 per cent fatal because losing money every time you sell a product or service isn’t sustainable.
“Never think ‘I’ll wait and see what happens for a few weeks, because by then it’s guaranteed to be too late. If you’re not making a profit on any aspect of your business, do something about it straightaway.”
If you think Darren could help your business, get in touch via 0845 5197104 or info@peacockfinance.co.uk
Darren’s three-point plan for riding out the storm
- Sell more – make sure your marketing is on point and you’re attracting as much business as possible
- Reduce your cost – make sure you acquire raw materials as competitively as possible
- Increase your prices – make sure you’re charging the right amount for your products and services.
