I’m a bit of a mixed bag when it comes to newspapers.
Every morning we “take” The Times on delivery. Partly because I enjoy reading it and partly because it supports the newsagent who employs Anna on her daily paper round!
But online, I tend to read The Guardian because, in my opinion, it has the best football section.
And it was while reading the football in The Guardian recently that I saw a very uplifting headline in the sidebar:
“Running a small business has become almost impossible.”
Not exactly the sort of thing that brightens up my day and lures me from reading some Liverpool transfer gossip.
But the more I thought about it, the harder it was to disagree.
The article was talking about the pressures facing small businesses – rising wages, higher National Insurance, increasing costs and customers having less money in their pockets.
We’ve certainly seen that.
The banking crisis. Brexit. Covid. Ukraine. Inflation. Energy prices. National Insurance rises. Minimum wages up. Extra dividend tax. And now conflict involving Iran.
And that’s a real list of issues, not the lyrics of a Billy Joel song!
At times, it can feel as though business owners are expected to absorb every shock that gets thrown at the economy.
Because if you’ve been running a business for any length of time, it can feel as though you’ve lurched from one crisis to the next. Just when one challenge starts to disappear in the rear-view mirror, another appears over the horizon.
And the great thing is that most business owners simply keep going. Every time a new challenge appears, they adapt, regroup and somehow find a way through.
During Covid, we had clients in travel, hospitality and events whose income virtually disappeared overnight. One week they were planning for growth, recruiting staff and investing in the future. The next they were wondering whether they would survive. There were some incredibly difficult conversations during those years, as businesses that had been built over decades suddenly found themselves fighting for survival through no fault of their own.
Today, the pressures are different, but they’re still very real.
The recent increases in Employers’ National Insurance and the National Minimum Wage have had a significant impact on many of our clients. If you run a restaurant, café, bar, retail business or hospitality business with lots of team members, those costs add up very quickly. At the same time, customers are facing higher costs themselves and becoming more careful about where they spend their money.
And then there is tax!!
Over the last few years, we’ve seen Corporation Tax increase, dividend taxes increase, allowances reduced or frozen and Employers’ National Insurance rise sharply. None of these changes are necessarily dramatic in isolation, but they all nibble away at the reward for taking the risk of running a business.
That’s probably the phrase I hear most often at the moment – “Is it worth it?”
Because business owners take all the risk. They’re the ones signing the leases, guaranteeing the borrowing, employing the staff and worrying about whether there will be enough cash in the bank to cover payroll at the end of the month. When customers don’t pay, when costs rise or when something unexpected happens, it’s usually the business owner carrying the responsibility.
Yet over the last few years we’ve seen a steady stream of tax increases and cost increases that have gradually reduced the reward for taking that risk.
I was chatting to one of our team last week and she said something that really struck me.
“I couldn’t imagine running a business. It’s just too much hassle.”
She wasn’t being critical. Quite the opposite. She isn’t even an accountant but she spends her days talking to business owners and hearing about the pressures they’re facing. If someone who isn’t an accountant can see how tough it looks from the outside, imagine how it feels for the people carrying that responsibility every day.
Now, before this turns into the most depressing newsletter I’ve ever written, there is some good news.
Business ownership has never been easy.
I’ve been around long enough to see businesses survive all of the things I’ve listed above and often come back stronger afterwards.
The businesses that tend to do best aren’t necessarily the biggest and they aren’t necessarily the hardest working. They’re usually the ones that understand their numbers, know where their profit comes from, know where cash is getting stuck and make decisions early when circumstances change.
They don’t simply work harder and hope things improve.
They review pricing. They improve efficiency. They focus on the customers and services that generate the best profits. They manage cash carefully.
And they make decisions based on facts rather than wishful thinking.
My view would be that it isn’t whether running a business has become almost impossible.
It’s whether running a business without good information, a good plan and good support has become almost impossible.
Because I think there’s a lot of truth in that (even if I do say so myself!).
And, if you need any help getting that good information, putting together a good plan…or just need a little support, please do let me know.
Cheers
Jon
PS Despite everything I’ve written above, I’d still rather be a business owner than not. Most business owners I know would say exactly the same!