It is no secret that many businesses are struggling at the moment as economic pressures mount and the upcoming Autumn Budget seems to hold little hope of reprieve.
While there has been a growing sense that small businesses are finding it hard to handle rising costs, the full scope of the problem has been unveiled as nearly a third of Scottish small businesses expect to shrink over the next 12 months.
We want to take a look at what is causing the decline and what businesses can do to escape this terrible fate.
Why are so many Scottish small businesses struggling?
A relentless increase in operational costs has driven many businesses of all sizes to the point of stagnation.
For small businesses, recent research from the Small Business Index (SBI) found that operational costs were weighing heavily on nearly all of them, with 89.4 per cent citing them as concerns.
This was paired with the impact of higher tax, labour and utility bills, all of which were holding back at least 50 per cent of businesses.
Given that these factors show little sign of improvement in the near future, it is no wonder that the same report found that 29.1 per cent of small businesses expected to contract over the next 12 months.
The problem seems particularly bad in Scotland, which saw the third sharpest drop in confidence in all of the UK regions, with only the East and West Midlands experiencing lower confidence.
The localisation of confidence drops could speak to a lack of investment or intervention in those regions from a Government that might be focusing resources into specific areas.
How can Scottish small businesses break the predicted contraction?
Many business leaders are rallying around an appeal to the Chancellor to make the Autumn Budget favourable to small businesses.
In the wake of her mini-speech, it seems that this optimism may be misplaced.
With little hope of external salvation, the only way that small businesses can brace for the challenges ahead will be to focus on their own finances and tax planning.
Understanding where your finances are now can help businesses to protect against the challenges that may be inflicted by the Autumn Budget.
It is more important during these difficult times to have a strong sense of financial discipline and having robust and accurate internal financial reporting can help with this.
By knowing about any potential gaps in your finances, you can cut out waste and more appropriately price products and services before problems become bigger.
Careful investment decisions and intelligent capital structuring are also vital for preserving your long-term prospects, as these can help illuminate the path forward.
If further tax hikes do come to pass, then it will be increasingly necessary to structure finances in the most tax-efficient way possible and this is where professional insight is valuable.
We can help you understand not only the obligations that could be holding you back but also how you can pivot your business to adopt some new growth strategies.
This might include seeking out additional revenue streams to make up for a decline in cash flows, or helping you to better manage your assets and working capital.
Scottish small businesses are set for hard times ahead, but we can help you approach challenges with confidence.
