Recessions can be tough on small businesses, but they do not have to spell disaster. With some smart thinking and a bit of planning, many firms can keep going and even emerge stronger once the economy picks up. Here are some practical ways to stay afloat when times are hard.

1. Cut back on unnecessary spending
Now is the moment to go through all your costs. Cancel anything you no longer use, negotiate better deals with suppliers, and look for savings wherever you can. Every bit helps.

2. Focus on what you do best
Stick to your most profitable products or services. When money is tight, it makes sense to concentrate on the parts of the business that bring in the most value.

3. Build strong relationships with customers
Your regular customers are more important than ever. Stay connected, offer good service, and look for ways to add value. People are more likely to stick with businesses they trust.

4. Keep an eye on cash flow
Having enough cash to cover the basics is vital. Chase late payments, offer discounts for early payment if it helps, and try to agree flexible terms with suppliers.

5. Find new ways to earn
Could you offer something new? Sell online? Reach a different group of customers? Exploring extra income streams can give your business a welcome boost.

6. Stay in the public eye
It may be tempting to cut back on marketing, but staying visible is key. Use low cost tools like email newsletters, social media, and local events to keep your name out there.

7. Look after people
A business is only as strong as the people behind it. Support your team and yourself. Good morale and clear communication can make a big difference during uncertain times.

A calm, steady approach and some flexibility can go a long way in helping your business come through a recession in good shape.

Asking your bank for a business loan can feel daunting, but it doesn’t have to be. With the right preparation, you can give yourself the best possible chance of getting a positive outcome.

Start with a clear purpose
Banks want to know why you need the money. Are you looking to grow, cover short-term cash flow gaps, or invest in new equipment? Be specific. A well-defined reason gives your request more weight.

Get your figures in order
Before approaching the bank, make sure your accounts are up to date and accurate. Be ready to provide recent financial statements, cash flow forecasts, and details of any outstanding debts. Banks want to see that you understand your numbers and can manage repayments.

Create a solid business plan
A clear, realistic business plan is vital. It should outline what your business does, your market, how you make money, and your plans for growth. Include how the loan will help, and how you intend to pay it back. This builds trust and shows that you’ve thought things through.

Know your credit position
Check your business and personal credit scores in advance. If there are issues, be ready to explain them. Banks will always consider risk, so transparency is important.

Be realistic and professional
Ask for a sensible amount based on your business size and turnover. Approach the meeting professionally—treat it like pitching to an investor. Be confident but open to questions.

Consider alternatives
If your bank says no, ask for feedback. You could explore government-backed schemes like the British Business Bank or look into alternative lenders and credit unions.

Preparation, clarity, and confidence go a long way when asking your bank for support.

Flexible planning is essential for adapting to uncertainty, responding to challenges, and seizing new opportunities. The world is unpredictable, and rigid plans can quickly become outdated. Whether in business or personal life, flexibility ensures resilience and long-term success.

Unexpected events such as economic shifts, technological advancements, or personal changes can derail strict plans. A flexible approach allows for quick adjustments without having to start over. Businesses, for instance, benefit from adapting to market trends or supply chain disruptions, ensuring they remain competitive.

Opportunities often arise unexpectedly. A business that initially planned to operate solely in physical stores but later noticed a surge in online shopping must be able to pivot. Those who rigidly stick to their original plans may miss out on growth.

Managing risks is another advantage of flexible planning. If a strategy is not working, adjustments can be made rather than continuing down an unproductive path. This is particularly important in business, where adapting marketing tactics or reallocating resources can make a significant difference.

Innovation thrives in flexible environments. Companies that allow for iterative development and experimentation can improve products and services based on real-time feedback rather than relying on outdated assumptions.

Employee morale and productivity also improve when people are empowered to adapt. A rigid plan can create stress, while flexibility fosters a more dynamic, responsive workplace.

Customer satisfaction depends on adaptability. Consumer preferences change, and businesses that adjust their offerings accordingly are more likely to retain loyal customers.

Ultimately, flexible planning ensures better resource allocation, the ability to respond to competitive pressures, and the freedom to evolve with changing circumstances. Rather than being a sign of weakness, flexibility is a strategic advantage that helps individuals and organisations thrive in an ever-changing world.

For small business owners, especially those operating as sole traders or in partnerships without limited liability, having adequate business insurance is not just a safeguard—it’s a necessity. Without the legal protection of a limited company structure, personal assets such as your home and savings are directly at risk if the business faces legal claims or financial losses.

One of the most critical types of cover is public liability insurance, which protects against claims if a customer or third party suffers injury or property damage due to your business activities. Similarly, professional indemnity insurance is crucial for service-based businesses, covering legal costs if clients claim negligence or poor advice.

Additionally, employers’ liability insurance is a legal requirement if you have staff, protecting against employee injury claims. Business interruption insurance can be a lifeline in unexpected disruptions, ensuring you can recover lost income and continue operations.

Without the right insurance, a single lawsuit, accident, or unforeseen event could financially devastate a small business owner. The cost of insurance is minimal compared to the potential consequences of being uninsured. Therefore, securing comprehensive business insurance is a vital step in protecting both your livelihood and personal assets.

The Government-backed Start-Up Loans scheme offers unsecured loans of £500 to £25,000 per person (up to £100,000 per business) to help entrepreneurs grow. With a fixed 6% interest rate and mentoring support, it's a great funding option for new businesses.

Securing financing to start or grow a business is one of the most vital steps in ensuring success. Finding funding can often feel challenging, especially when traditional options like mainstream bank loans may not be available or come with strict conditions, such as requiring personal guarantees or offering security. Fortunately, the Government-backed Start-Up Loans scheme offers a great alternative.

This scheme provides personal loans to individuals looking to develop their business offering a range of benefits to support new entrepreneurs. Not only can applicants receive an unsecured loan (meaning no assets or guarantors are required), but they will also be paired with a business mentor for up to 12 months to guide them through the early stages of their business journey.

Business owners or partners in a business can individually apply for loans ranging from £500 to £25,000 each. A maximum loan amount of £100,000 is available per business if multiple business partners are involved. The average loan amount is around £7,200, with a fixed interest rate of 6% per annum. Loan repayment terms range from 1 to 5 years, and there are no application or early repayment fees.

To be eligible for the Start-Up Loan, applicants must meet the following criteria:

Starting or growing a small business often requires capital, but securing the right funding can be a challenge. Fortunately, there are various funding sources available to entrepreneurs, each with its own benefits and drawbacks.

Personal Savings

Many small business owners start with their own savings. This avoids debt and interest costs but can be risky if the business struggles.

Friends and Family

Borrowing from friends or family is common, but it’s essential to have a clear agreement to prevent misunderstandings.

Bank Loans

Traditional bank loans offer structured repayment terms and can be used for various business needs. However, they often require a strong credit history and a solid business plan.

Government Grants and Schemes

In the UK, grants are available from organisations like Innovate UK and local councils. These don’t need to be repaid, but they are highly competitive and often have strict criteria.

Crowdfunding

Platforms like Kickstarter and Crowdfunder allow businesses to raise money from the public. This is particularly useful for innovative or community-driven projects.

Business Angels

Angel investors provide funding in exchange for equity in the company. They often bring valuable business experience and mentorship alongside capital.

Venture Capital

For high-growth startups, venture capital firms can offer large investments. However, they usually demand significant control and a share of profits.

Invoice Financing and Asset-Based Lending

Businesses can use unpaid invoices or assets as collateral for funding, helping with cash flow issues.

Alternative Lenders

Online lenders and peer-to-peer platforms provide faster, more flexible loans but often at higher interest rates.

Choosing the right funding source depends on your business needs, growth plans, and willingness to take on risk or debt.

A well-structured credit control system is crucial for small businesses to maintain cash flow and reduce the risk of bad debts. Without proper controls, late payments can disrupt operations and put financial strain on the business.

Clear Credit Terms
Setting clear credit terms at the outset ensures customers understand their payment obligations. This includes defining payment deadlines, interest on overdue invoices, and the consequences of non-payment. Offering different terms for new and repeat customers can help mitigate risk.

Creditworthiness Assessment
Before extending credit, assessing a customer’s financial stability is essential. Checking credit reports, trade references, and previous payment history can help determine whether a customer is likely to pay on time. Establishing credit limits based on risk assessments reduces exposure to bad debts.

Efficient Invoicing Process
Timely and accurate invoicing encourages prompt payments. Using electronic invoicing systems ensures invoices reach customers quickly and reduces the risk of disputes. Clearly stating payment terms, due dates, and bank details on invoices makes it easier for customers to process payments without delay.

Proactive Payment Monitoring
Tracking outstanding invoices and following up on late payments is vital for maintaining cash flow. Automated reminders, personal follow-ups, and structured escalation procedures help ensure payments are received on time. A disciplined approach to chasing overdue invoices prevents accounts from falling into arrears.

Flexible Payment Solutions
Offering multiple payment methods, such as direct debit, online payments, and instalment plans, makes it easier for customers to pay on time. Flexibility can improve customer relationships while ensuring steady cash flow.

A well-managed credit control system not only reduces financial risks but also strengthens business stability. By implementing clear policies and proactive follow-ups, small businesses can maintain a healthy cash flow and build long-term customer relationships.

Benchmarking financial results involves comparing a business’s financial performance against industry standards or competitors. This process offers numerous benefits, helping businesses identify strengths, weaknesses, and opportunities for improvement.

Firstly, benchmarking provides a clear understanding of a company’s position in the market. By comparing key financial metrics such as profit margins, costs, and revenue growth with peers, businesses can identify performance gaps and areas needing attention.

Secondly, it aids strategic planning. With insights from benchmarking, businesses can set realistic targets and develop informed strategies to enhance profitability and efficiency. For example, if a competitor achieves higher profitability through lower overheads, a business might explore cost-reduction strategies.

Moreover, benchmarking promotes continuous improvement. Regular comparisons highlight trends and potential risks, enabling proactive decision-making. It fosters a culture of learning, as businesses adopt best practices from industry leaders.

Lastly, benchmarking can enhance investor confidence. Demonstrating performance in line with or better than industry standards reassures stakeholders of a business’s stability and growth potential.

Overall, benchmarking financial results is a powerful tool for driving competitiveness, efficiency, and long-term success in today’s dynamic business environment.

HMRC together with the Department for Business and Trade (DBT) have launched a new consultation on e-invoicing to encourage its broader adoption among UK businesses and government departments. The consultation will run for 12-weeks and aims to cut paperwork for businesses and help improve productivity.

This is the first time that UK businesses have been invited to have their say on the government’s electronic invoicing (e-invoicing) proposals.

E-invoicing is the digital exchange of invoice information directly between buyers and suppliers. It could help businesses get their tax right first time, reduce invoicing and data errors, improve the accuracy of VAT returns, help close the tax gap and save time and money. It usually results in faster business to business payments, leading to improved cash flow and less paperwork.

HMRC provided the following example of where e-invoicing has improved cash flow. A UK NHS trust where e-invoices are ready for processing within 24 hours, compared to 10 days under paper invoicing. Their e-invoices are typically paid almost twice as quickly than paper invoices, with supplier queries reduced by an average of 15%.

Topics that the government is interested in exploring as part of the consultation include:

With potential benefits like faster payments and fewer errors, e-invoicing could help UK businesses save time and money. If you are interested in sharing your thoughts, the consultation is open until 7 May 2025.

Deciding whether to incorporate your business in the UK involves evaluating several key factors:

Limited Liability Protection

Incorporating as a limited company creates a separate legal entity, safeguarding your personal assets from business debts and liabilities. This means your personal finances remain protected if the business faces financial difficulties.

Tax Implications

Operating as a limited company can offer tax advantages. Companies pay Corporation Tax on all trading profits at a maximum rate of 25%; for smaller companies, this rate can be as low as 19%. Additionally, dividends distributed to shareholders are not subject to National Insurance, potentially providing a more tax-efficient method of remuneration.

Administrative Responsibilities

Incorporation brings increased administrative duties, including:

Professional Image and Credibility

A limited company structure can enhance your business's credibility, potentially attracting more clients and investors. This formal structure often instils greater confidence among stakeholders.

Business Growth and Investment

Incorporation facilitates business expansion by allowing:

Conclusion

Incorporating your business offers benefits like limited liability and potential tax efficiencies but comes with added administrative responsibilities. It's crucial to assess your specific circumstances, financial goals, and the current economic environment. Please call if you need help considering your options.