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Small Business Plan to Survive Uncertain Economic Times

We’re living in times of economic uncertainty with Brexit looming amid leaked Brexit impact reports showing that the UK is likely to be worse off in future.  We know that this is particularly worrying for Britain’s army of small to medium enterprises (SMEs) on which the UK economy depends so heavily.  With SMEs accounting for 99% of all UK businesses, the health and wellbeing of these companies is vital for the economy’s future prospects.  Today we’re going to look at the top three financial mistakes that small businesses should avoid in order to minimise the risk of experiencing cash flow problems at this precarious juncture in our history.

  • LATE PAYMENTS – The UK continues to have a late payment culture that is particularly damaging for small business, as we’ve pointed out in the past.  Clients need to be given a reasonable time (such as 14 days or 28 days) in which to pay an invoice.  When the set amount of time has passed, it’s time to make use of any protective policies that have been put in place.  This can be difficult for small business owners as you may not want to harm the business relationship you have with your client.  However, you may harm your business and its future if you don’t take action.  When it comes to dealing with your own debts, paying them on time is essential if you want to keep a good credit score, as well as maintaining a good, ongoing relationship with your suppliers.  Having a payments solution will help to keep track of both accounts receivable and accounts payable.
  • EMERGENCY FUNDS – During these uncertain financial times, you never know what you may face in the future, so a contingency plan is essential.  We recommend that small business owners have a three month emergency fund as so many small businesses fail as a result of late payment or lack of capital.  Setting up an emergency fund of this type is a great way of making sure your business survives should disaster strike and it is a great way of saving some money if the funds are not used.
  • SEPARATE BUSINESS AND PERSONAL FUNDS – This is one of the most common pitfalls for small business owners, combining business and personal funds.  This is bad practice for many reasons, chief of which is that it adds an extra layer of complication when it comes to balancing accounts, filing taxes, the ability to measure profits and financial goals.  We advise that you open a business account that has its own credit card and only use this for business purposes, enabling you to keep your business and personal funds totally separate.

Financial mistakes do occur, some clients may persist in making late payments, but having a contingency plan in place will enable your business to continue to thrive.  Taking the few simple steps outlined above will help you to recover from any financial mistakes and could mean all the difference between your business surviving or going under.