The 2010 emergency budget has done small business very little good, if any. In fact, it has actually harmed the potential for growth for many such businesses, meaning that they will have to be even smarter at managing their resources to survive or thrive. Most small business sell direct to the public, who following the budget will have less spare cash in their pockets and less job security.
A small business needs good cash flow to be able to stay in business. If cash stops coming in, a business can very quickly go into a downward spiral. At times like these, a good accountant is essential. An experienced accountant can review your cash flow and suggest ways to improve it and to minimise the impact of reduced cash flow on your business.
Big businesses can weather a financial storm by cutting their margins, changing working methods or re-negotiating their workers terms and conditions. For a small business, doing any of these things can be difficult if not impossible. However, good accounts that show you the cost of each process within your small business can be used to identify the limited cost savings that are available. Your accountant should be able to produce reports for you that help you to better understand your business and areas in which you can cut overheads.
Had the government’s emergency budget included: the freezing of business rates or the subsidising of commercial rates, this would have really help existing small businesses and people who want to set up a new small business. Since the budget did not include either of these measures, small businesses need to consider if they can reduce those overheads themselves. They may for example be able to move to smaller premises. Your accountant can help you to work out the true cost of such a move, so that you can see if doing so makes sense for your business.
Using your accountant to draw up a revised business plan after a budget is vital. This can take quite a bit of time, but without it you will not spot trouble until it is too late. You should do this after every budget for the best results.
Tags: Finance