A sharp turn in the UK’s economic outlook. What does it mean for business owners?

With the Office for National Statistics having made huge revisions to their statistics on Britain’s GDP, David Fort discusses what the economic outlook means for business owners on the ground.

Earlier this month the ONS announced huge revisions to their statistics which have completely changed the course of the economy’s post-pandemic narrative.

Initially it was reported that the UK’s economy was 1.2% smaller than that of 2020. But the new statistics which were compiled from richer data, suggest that the economy had actually grown by 0.6% in the last three months of 2021.

This is a sharp twist from the commentary only last month, wherein economists had predicted that we were heading towards a recession, with income inequality, unemployment and levels of debt all expected to rise.

For business owners, this back and forth can be hard to keep up with, especially as we await the upcoming Autumn Statement.

So, let’s unpick what this actually means for owner managers…

What does this mean for business owners?

And while the updated commentary on Britain’s GDP may paint a more positive picture of the wider UK economy, the statistics are still retrospective and there’s no material improvement for most.

The data doesn’t change the landscape for the average business owner on the ground. It just says that the original data was wrong, and that’s as far as it goes for most. Especially if you’re already grappling with the nuances of higher interest rates, the cost of living crisis and the rise in tax rates.

Economists can’t predict the future. But as the owner of your business, you can prepare for it. So if you’re looking at the economic outlook and thinking your business doesn’t align with GDP – don’t panic. Plan.

Have you reviewed the support on offer?

The recent statistics and accompanying news coverage might suggest that Britain is on a path for growth. However, the reality of the cost of living and energy crises continue to be battles that most owner managers are fighting.

When planning ahead, it’s worth looking into the support measures on offer. The Energy Bills Discount Scheme will continue to run until the end of the financial year, offering eligible businesses discounted rates on gas and electricity.  Pots of funding and support measures are often cropping up through local authorities too.

Hopefully, with the Autumn Statement on the horizon, we will see more support measures being put in place for businesses who are facing the reality of today’s economy.

But rather than relying on this hope, there are other steps that owner managers can take when planning ahead.

Where can you cut costs?

Lowering outgoings is always a concern for business owners. Doing so strategically and mindfully, whilst still keeping your long term goals in mind can have a hugely positive impact on your bottom line.

Take a look at the entire cost base of your business, and ask yourself:

• Do you still need a physical premises? Or can you operate remotely/in a smaller space to save on overheads?
• Are there other suppliers out there who could offer you a better deal?
• Do you fully utilise all of your software licenses? Or could you change your provider/cancel entirely?
• When was the last time you reviewed your production costs? Is there scope to lower these whilst maintaining quality?

Removing any discretionary and unnecessary costs can really improve your profitability, helping you to face the future with more confidence.

Is now the time for a white space review?

It’s no secret that retaining customers and clients is significantly more cost efficient than acquiring new ones.

So take a look at your current offering for all of your clients/customers. Where could you offer them more and up/cross sell? Being able to anticipate the needs of your end users’ can go a long way in improving loyalty and satisfaction too, so this can be a win-win scenario.

A good starting point is looking at customers and clients where you do this well. What can you learn from this and apply elsewhere? And can this identify where you’re going wrong/not doing as well with others?

Again, in the long term, this can help improve your profit levels to ensure your in a more secure financial position for the months and years to come.

How strong is your management information?

Strong management information is key to success but is often a stumbling block for many. If you have a clear oversight of your cashflow, accounts and marketplace, it will give you a sound understanding of your business. This can be absolutely vital in the strategic decision making process.

The huge array of software systems and cloud technologies on offer can really help to manage your information efficiently. But what you do with this information is vital. If you’re struggling to navigate your way through all the information you’re sitting on, we would always recommend consulting your advisors. They will offer a third-party, trusted opinion which keeps the bigger picture in mind whilst helping you to grow.

Speak to an expert

Whether it’s your management information, any of the topics above or the impact of today’s economy on your business, consulting your advisors can offer the reassurance and guidance you need.

Our team of experts support a huge variety of businesses across the North of England and Scotland, ranging in size and differing in industries. They are on hand to help you navigate today’s economic climate, so you can face the months and years ahead with confidence. Get in touch to see how we can support you.

All information true to date of publication. Please note there have been further economic updates since.