Boosting confidence in tough times – How SMEs can adapt to financial challenges
The burden on small and medium-sized enterprises (SMEs) is already quite heavy due to the current economic climate, but it may worsen in the coming months, with potential changes to Capital Gains Tax (CGT) being considered in the October Budget.
If CGT is aligned with Income Tax rates, this could discourage investment and entrepreneurial activity, hitting SMEs the hardest.
The tax burden would not only make it more difficult to grow but could also force many businesses to close their doors entirely.
Despite these challenges, business owners should not feel too deflated, as there are a number of strategies available to keep SMEs ticking over.
Financial planning and forecasting
Firstly and foremost, a strong financial plan should be in place. This should include cash flow forecasting and a clear understanding of when key tax payments are due.
Keeping a close eye on finances will help businesses better prepare for potential financial shortfalls and ensure they are prepared for upcoming tax increases.
Seek alternative funding sources
With traditional financial support becoming harder to secure, alternative sources of funding are a great way to secure the future of your SME.
Peer-to-peer lending, grants, and Government support schemes should all be considered.
Keeping up to date with these options and applying early can make a huge difference.
Manage costs wisely
A careful review of business expenditure is a must.
This may involve negotiating better terms with suppliers, reducing unnecessary overheads, or considering outsourcing certain operations to cut costs without compromising on quality or efficiency.
Plan for potential tax changes
SMEs should understand the implications of tax changes such as the speculated rise to the CGT rates and take steps to mitigate their impact.
This could include timing the sale of business assets before the rates rise or restructuring to minimise the CGT burden.
If you are an SME owner and would like financial help and direction for the future, contact our team today.
