2023 begins with a bleak economic outlook after the UK entered an official recession in the third quarter of last year. Though the decline is expected to be shallow, latest estimates show that it will continue for much of the year.
It is to this backdrop that businesses and individuals set out their financial plans. Inflationary pressures, utility costs and labour market challenges will all have to be factored into your forecast for the year ahead.
After supporting businesses through the pandemic years, our team is optimistic of the opportunities to start afresh and revitalise your business, despite the wider economic situation. Here, they share their advice on getting ahead this New Year and safeguarding your operations ahead of what’s to come in 2023.
Budget Early and Often
Utility bills increased steadily throughout 2022 to become a potentially crippling running cost. Though we have recently seen them plateau and in some cases drop, the market remains tight and exposed to further increases.
“With inflation still above 10% and interest rates responding accordingly, business owners will want to create detailed budgets and forecasts that are regularly reviewed,” advises Business Services Partner Michael Branniff. “Building a live budgeting system that can be tweaked accordingly is the best way to achieve this, and we can support any company that wishes to implement this.”
It’s also important to remember that domestic energy support payments of £600 will be issued to customers from January. Though not a business support measure, it is likely to generate a boost in consumer confidence meaning that the companies dependent on public footfall may see a welcome uptake in sales.
Invest in Recruitment and Retention
This won’t be a recession categorised by high unemployment. In fact, it will be the opposite as the hiring boom looks set to continue. Planning for this and investing in recruitment and retention will be vital, according to Consulting Partner Donal Laverty.
“Employers are citing high staff turnover and difficulty attracting in new talent as one of their biggest barriers to growth. As individuals seek higher pay and more flexibility and recruiters chase the same talent pools, the value that you can offer your current and future team will make all the difference.”
Flexibility to offer remote-capable jobs; attractive pay and benefits to cover the cost of living; help with travel and childcare; a healthy company culture and a focus on diversity and inclusion all feed into that all-important Employer Value Proposition.
Donal adds: “Delivering this value will help with attracting people in and investing in upskilling and redevelopment will ensure the individuals who are already part of your team are supported to grow alongside you.”
For Restructuring and Insolvency Partner Darren Bowman, managing cashflow should be top of your priority list.
“Identifying pressures on your cashflow as early as possible will always maximise your options for recovery. Don’t let your business get into trouble, talk to us and allow us to assess the situation before you get there.”
Solutions to almost every business challenge do exist, whether it’s a company restructure or Voluntary Arrangement. “There is no escaping the recession, but there are ways to prepare for it” adds Darren. “Though the reasons may differ, we see periods of economic decline every few years. If your cashflow is strong, any difficulties you do face won’t necessarily spell the end for your business.”
Assess your Taxation Obligations
The Chancellor will deliver a spring budget and OBR forecast on 15 March 2023. However, there are several planned changes to your taxation obligations that we are aware of and can be preparing for.
Income tax and National Insurance thresholds will remain frozen until 2028, meaning more individuals will begin paying the higher rate of tax as their salaries increase. Cuts to Capital Gains Tax and Dividends allowances will come in April, along with a rise in Corporation Tax to 25% for companies with annual profits of £250,000 or more.
Head of Tax Angela Keery advises that forward planning for both your business and personal finances is the best way to factor in these changes, and what might come next in March. “Setting a realistic, achievable budget for the coming months that accounts for continuing inflation and rising energy costs is important. Seek professional advice where possible, and we will take the work out of your financial planning for you.”
Embrace New Opportunities
Challenge can inspire new and improved ways of working. Business owners in Northern Ireland are pragmatic, forward-thinking individuals who have withstood years of economic pressure and restrictions on their ability to trade, reminds Audit & Assurance Partner Joanne Small.
“Embracing the New Year as a time to consider fresh ideas, whether it be an acquisition or diversification or simply some system changes to improve your efficiency, can really improve your outlook. Being receptive to change can be a great advantage, and my advice would be to always involve your advisors early if you are considering a major change in 2023.”
Safeguard your Success
Each year we see a rise in business and domestic targeted scams. The online space is an integral part of many businesses; however it can open your operations up to a host of fraudulent attacks. Make use of any quiet periods to assess your security and invest in professional advice where appropriate, advises Senior Manager Debra Moore-McDevitt.
“It’s important to be vigilant online and use only trusted suppliers and online sites. An audit of your stored employee and customer details is a good use of time, and a responsible way to start the year knowing that all details are safe, secure, and protected.”