Just as the Covid crisis begins to fade, a number of other significant challenges for entrepreneurs have presented themselves. Looming largest is runaway inflation, which sees the Bank of England attempting to control it by raising interest rates.
The combination of sharply rising prices with successive increases in interest rates has put pressure on business owners for two reasons. Firstly, the cost of doing business – buying raw materials, paying wages and general overheads – has shot up.
Secondly, rising interest rates mean the cost of business loans will go up, which restricts financing options for companies, especially those already in debt.
What can you do if your business is trying to deal with rising prices? Many businesses are contemplating – or have already taken – drastic action to mitigate the impact of inflation. According to a survey of 985 businesses, published in February this year by the British Chambers of Commerce, 73 per cent of firms said they are increasing prices in response to rising costs.
Another issue for businesses to contend with is rising energy prices. Unlike consumers, businesses do not have a price cap to protect them, and they face spiralling costs in the months ahead. According to research commissioned by NatWest in Sept 2021, out of 500 small to medium size business owners surveyed, 70 per cent believe that the cost of their energy bill impedes the growth of their business.
In these challenging times, it’s important for businesses to look carefully at their expenditure and ensure the financial planning arrangements in place continue to remain up to date and relevant.
To receive a complimentary guide covering wealth management, retirement planning or inheritance tax planning, contact Peter Harding Wealth Management on 01202 830730 or email peterhardingwm@sjpp.co.uk
Peter Harding Wealth Management is a trading name of Peter Harding Practice Ltd.
This article is featured in the July issue of the Dorset Business Focus magazine. Read on the online version here.