Survival the name of the game for NI businesses in 2023

THERE is no doubt that the past three years have thrown up unprecedented challenges for local business. From the Covid-19 pandemic to Brexit, the war in Ukraine to ongoing political and economic instability closer to home, survival has very much been the name of the game for companies across Northern Ireland and beyond.

Unfortunately, the outlook for 2023 is not much brighter with experts predicting a recession in the next 12 months. With this in mind, Lisburn-based digital accountancy specialist Exchange Accountants has put together some tips to help businesses consolidate and thrive in 2023.

“At the start of 2020, nobody could have foreseen what was coming down the track, not just from a business point of view but on a global scale,” explains Exchange Accountants director Conor Walls.

“It’s really been a perfect storm with a string of unprecedented global events hitting businesses and the economy from all angles – whether it be spiralling energy costs or issues surrounding supply chain continuity and the flow of goods between markets.

“With the Northern Ireland economy expected to fall into recession this year in the face of high inflation, low consumer confidence and increased borrowing costs, it’s vital that companies take stock and try to stay resilient during the difficult months ahead,” he added. “Hopefully, these tips will at least help keep local businesses on the right track during 2023.”

Resilience and Contingency Planning

If you haven’t got a business resilience and contingency plan, now is the time to make one – and if you have got one, you may find it helpful to review it on an annual basis. Even if you’ve discussed how you might deal with a crisis with others in your business, it is important to formalise your plan and have complete clarity on what you need to do in the event of an emergency.

It’s important to have a clear picture of your own financial situation, and how cash is moving in and out of your business. Using online accounting software, such as XERO, is a great way to get an up-to-date understanding of this, giving you accurate numbers on your business at any point in time. With a clear picture of your financial situation, you can move forward and assess efficiency and risk plan.

The key is to plan for the worst, execute decisively and remain focused on the long term. This type of plan can allow business leaders to act swiftly and reallocate capital and resources during a volatile operating environment.

Affordable Sustainability

Sustainability is a trend that isn’t going anywhere. The consequences of global temperatures rising by one degree has resulted in extreme weather events, rising sea levels and diminishing Arctic Sea ice. Businesses are instrumental to secure our planet’s survival, and business owners who accept the importance of their role in sustainability will reap the benefits.

If you want to keep thriving as a business, you will need to adapt your strategies towards long term success in financial and non-financial terms. Identify where you can create value and in turn, adapt your strategy accordingly. Almost £5 billion of funding is available to help UK businesses become greener as part of the government’s commitment to reach net zero emissions by 2050.

Deeper Digital Transformation

The pandemic has accelerated the digitalisation of small businesses, with research by Sage showing that 8 in 10 SME’s now need digital tools to start, survive and grow their business.

The introduction of the Government’s Making Tax Digital (MTD) programme has been put back two years until April 2026 but digitising your accounts in 2023 and preparing for this change as soon as possible will stand you in good stead. Maximise available budget and avoid waste by switching to digital solutions. Online and offline are merging, with consumers shopping in-app for example, and then going in-store to collect their purchases. Many payment trends are also here to stay, including frictionless payment methods such as digital wallets and in-app payments, and Buy Now Pay Later (BNPL). In 2023, technology can help small businesses navigate a range of challenges and opportunities. From improving customer experience and driving operational efficiencies, to using data for increased sustainability.

The Government’s Help to Grow: Digital scheme offers advice and financial support to help small businesses adopt to the latest digital technology, with discounts worth up to £5,000 available towards productivity-enhancing software including e-commerce, customer relationship management and accounting packages. Be quick though as the deadline for new applications is February 2nd, 2023. Discounts issued for eligible software must be redeemed within 30 days from issue date.

Are Trends Electric?

Energy bills and transport costs are increasingly big overheads for companies and wipe out your bottom line if you’re not careful. Take time to look at how you can potentially reduce expenditure on company vehicles and energy bills and sign up for any Government assistance to help you achieve this.

As well as saving money on traditional fuels, electric vehicles have very attractive tax benefits for businesses providing company cars. Since April 2020, businesses have been able to claim 100 per cent of the cost of a new electric vehicle against profits in the year of purchase, saving thousands in corporation tax.

In addition, company car drivers will also save thousands of pounds from a vastly reduced ‘benefit in kind’ charge to encourage motorists to go electric and reduce carbon emissions on our roads. This also reduces Class 1A National Insurance contributions for employers. Government grants are available to help businesses install electric vehicle (EV) charge points for staff on their premises. To download Exchange’s free eBook on the benefits of electric vehicles for businesses, log on to https://exchangeaccountants.com/ev-guide/ With energy prices going through the roof, businesses should consider looking at rooftop solar panels to generate electricity and reduce power bills significantly. As well as reducing your carbon footprint, solar panels utilise the ‘dead space’ on your roof to give you electricity at the cheapest possible cost. And with electricity prices as they are, your investment will pay for itself faster than ever. Again, the Government have tax relief measures to help you with this, namely the 130% Super-deduction and Special Rate (50%) First Year capital allowances – which you can claim on the cost of qualifying plant and machinery, including solar panels.

Investing in People

Investing in people, technology, and expansion in 2023 to achieve sustained growth is an emerging trend for 2023. A desire to retain your existing staff and highlight staff benefits can have positive tax implications for your business. Wellbeing is something that is extremely topical now, and ultimately stress at work can affect every facet of your personal life. Businesses who are creating a working environment that encourages good health fosters a more stable workforce. It also helps facilitate better team relationships, which in turn drives employee satisfaction, performance, and morale. There are schemes you can put in place without being out of pocket as a result, such as Bike to Work, staff training, working from home, and counselling. Holding on to staff who know your business and who you’ve trained up to be part of your team is a lot more cost effective than losing them and having to recruit again in these difficult times.

Established in 2011, Exchange Accountants provides premier accountancy services and tax advice to a wide variety of locally based SMEs and individuals. Exchange was the first accountancy practice in Northern Ireland to be recognized as a Xero Gold Partner – and in 2021, the company achieved Platinum Partner status with the market-leading cloud accountancy software provider.