What does the ‘mini budget’ mean for your business?
The ‘mini Budget’ from Truss’ government continues to spark debate on how we’ll afford to meet the costs committed to in the 23 September 2022 announcement. Experts are widely predicting that the Bank of England will act by raising interest rates. Some City analysts think UK rates will climb to 6% or beyond in 2023.
Clearly, high interest rates are extremely damaging, increasing the cost of credit at a time when firms are already struggling with spiralling outgoings. These costs will continue to rise should the pound stay low or even sink further against the dollar, as imports become more expensive.
In this short article, we’ll look at whether your business is able to survive whatever comes next. And if not, what help is available to you.
What’s the financial position of your business?
There’s never been a better – or more important time – to take a step back and assess how your business operates day to day, and whether what you’re doing is working. You might already be seeing some red flags that show your business might be approaching an insolvent position. Signs like:
- losing business.
- paying your suppliers late.
- worries about meeting your tax commitments.
- company directors putting their own money into the business.
If this sounds familiar, you need to act immediately before your situation becomes more serious.
What can we do if your business is struggling but solvent?
If you work with a licensed insolvency practitioner before your business’ position becomes insolvent, you’ll have more options.
We commonly begin by revisiting your business plan. Doing this annually is no longer enough. You need to be going back to it regularly, as the economic and political situation changes and evolves, to make sure that it’s resilient enough to withstand what happens next.
We’ll help you answer questions like: what safety nets do you have in place? Can you do more to adapt your business to the current circumstances and make it more stable?
To kickstart this process, we use our own method called The Kitchen Table Guide – so called because we metaphorically unpack every part of your business onto ‘the kitchen table’ to see what works and what doesn’t. Once we’ve looked at any aspects of your business that could be streamlined (or removed altogether) we create scenarios for many eventualities, to see how your new-look business can cope with future challenges.
Is your business already insolvent?
he most important thing to note is that, if you’re aware that your business is already insolvent, you must stop trading immediately: it is illegal for a business to trade while knowing it is in an insolvent position. You’ll also need to seek the help of a licensed insolvency practitioner, who will be able to talk you through your options.
In some cases where your debt is unmanageable, you might need to consider a Company Liquidation to deal with your company’s debts. However, this doesn’t necessarily mean the end of the road for your business. We are sometimes able to perform a Start Afresh Liquidation to address your company’s debts and restart your business under a new company.
As with all insolvency procedures, these both need to be overseen by a licensed insolvency practitioner. If you’ve identified with the situations mentioned in this article, or your company is facing financial difficulties caused by the current economic climate, you could benefit from our advice and guidance.
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