Last year was a tough one. A worldwide pandemic combined with Brexit uncertainty has made this a difficult time to run a business. Thousands of businesses have found the challenges too much to deal with, and an unprecedented number of shops, pubs, restaurants and companies have had to close their doors for good in recent months.
New businesses have struggled the most, with many falling through the cracks of government assistance and being left without support. With a double-dip recession inevitable, there’s never been a riskier time than now to start a new venture.
But while the risks are inevitable, there is also opportunity. Stringent business planning combined with expert financial advice can give new business owners the chance they need for survival. Keep reading to discover how your new business can make the most of the year ahead.
The Challenges Facing New Businesses in 2021
Business owners starting new ventures in 2021 have a lot to consider in order to give themselves the best possible chance for survival. It’s not just small to medium-sized businesses that have been struggling through the pandemic, but large household names have become insolvent and forced into administration (high street retailer Debenhams has seen the most high profile liquidation).
In addition to the regular difficulties faced by new businesses, owners starting new ventures need to seriously consider and plan for the unique challenges that are ongoing. The three major difficulties facing businesses in the UK in 2021 are the COVID-19 pandemic, Brexit, and recession.
While the worst of the pandemic is behind us, business owners still need to deal with pandemic proofing their business, as it’s highly likely we could still see further outbreaks of new strains of COVID-19 and further lockdowns, despite the vaccination programme. Different sectors of the economy face more difficulties than others, with hospitality being the hardest hit industry in the UK. If you’re starting a new business now, then you need to know what the implications of further lockdowns mean and how your business can operate safely in a covid-free environment.
Brexit uncertainty has been polarising businesses in the UK (and Europe) since the result of the referendum was announced. It’s taken five long years of negotiations but, for good or bad, the UK has finally left the European Union. The full economic changes won’t be realised immediately and the effects will be more keenly felt in different parts of the country and across different industries.
If your new business trades with Europe (through imports or exports) then you need to consider the extra bureaucracy this will now entail. Government directives regarding new customs laws for example have never been clearly explained, leaving many business owners with added work in order to comply with new laws.
The country has been in recession since the first national lockdown in March 2020. Business plummeted, and although there was a brief comeback in summer, things aren’t looking much better in 2021.
A double-dip recession is unfortunately likely, and this brings a whole new set of challenges for new business owners. With less disposable income, products and services are harder to sell to new customers, while it becomes more difficult to secure loans or favourable interest rates from creditors.
However recessions, though a challenge, can present unlikely opportunities for those that have the cash and the know-how to take calculated risks and make calculated investments.
Business Survival Tips to Help Your New Venture Survive
Conditions are not ideal for starting a business, that’s the tough truth. But it doesn’t mean that with the right planning and advice, you can’t seize the opportunities available now.
Here are the best ways for new businesses to survive in these difficult economic times.
Plan, Plan and Plan Again
Planning is always the key to success, regardless of the economic climate. When the odds are stacked against you though, planning needs to be more stringent than ever.
New business owners need to plan for more than ever before, too. Pandemic planning, Brexit planning and recession planning are all integral for survival at the moment. Business plans need to be thorough, foolproof, and they need to plan for the worst.
But with such uncertainty, businesses need to put themselves in a position where they’re also flexible. Business plans need to be adaptable at a moment’s notice to new lockdown laws or new trading rules, they need to be fluid and there needs to be contingencies in place.
Identify Risks Early On
New business owners need to implement an intense risk management process early on. Risk management needs to be part of the early business planning stages, as there are an incredible number of risks to contemplate at the moment.
External audits and professional risk management advice can help you to establish areas of the business that are more precarious than others. Identify risks early and it’s possible to restructure or diversify business plans before things become too set in place.
Risk management is a continuous process, too. As the pandemic has taught us, there’s no way of identifying and accounting for every imaginable risk. What you can do however is be prepared for the most likely scenarios, while continually watching out for new risks and dangers (this is particularly pertinent for companies that could be affected by changing trade deals and the ever-evolving relationship with the European Union).
Identify Opportunities Early On
As well as identifying risks, it’s also important to identify opportunities early on – and to take them on, where possible.
At the moment, there are lots of gaps in the market that need filling as people adapt to new lifestyles and new ways of doing business. There are gaps in the market where businesses have failed, too.
A recession is tough, but with expertise and some savvy investment, you can take on opportunities now that in the future may become incredibly profitable.
Don’t Rush In and Be Realistic
Mitigating risk and taking calculated investment opportunities is the best way to operate as a new business owner in an uncertain economy. That means planning, researching and not rushing in too early.
It might be tempting to get your product off the ground right away, but what happens if we go into a stricter lockdown and you’re caught partway through a product launch?
There’s a lot to consider and new business owners need to be realistic about their growth, their sales and the time it will take to become profitable.
Keep Expenses Low
At a time like this, there’s no telling where the next sales will come from. Cash is always tight for new businesses, and for the foreseeable future business owners need to keep costs as low as they can.
This doesn’t mean don’t invest. Investment is key to business success. What it means is keeping those investments streamlined. Rather than hiring a full-time member of staff, for instance, look at contracting freelancers or contractors as and when you need them.
Instead of renting an expensive office space in the midst of a pandemic, make the switch to remote working, as it’s surely the future.
And like any successful business owner knows, in the early days if you can do it yourself to save a few pounds, then do it yourself!
Invest in Professional Advice
Starting a new venture in the middle of a pandemic, in a country full of political and economic upheaval is no easy task. If you are starting a new business now, you need to ensure that you have access to as many resources as possible.
As a responsible business owner, it’s important that you seek out impartial business advice from professionals. Business planning has never been more important, and it’s wise to have the expert opinion of business and financial advisers.
Professional advice can help you solidify business plans, mitigate risk and identify areas of opportunity you may have missed. Invest in the best advice and give your new business the best possible chance for survival.
Build Your Network and Ready to Adapt
Most importantly of all is the need for new business owners to be flexible, adaptable and open to change. As we are all constantly reminded, these are unprecedented times. We can’t plan for everything, so instead we must plan to adapt.
While sales might be difficult and profits low during a recession, this is also the time to create networks, to integrate yourself into your chosen industry, and to be ready to bounce back when the rest of the economy does. Businesses that survive now are the businesses of the future!
Contact Irwin Insolvency Today for Your Free Consultation
These are challenging times for new businesses in the UK but with the right guidance, advice and expertise there are also opportunities just waiting to be taken advantage of.
With decades of advising business owners how to succeed, Irwin Insolvency is ready to help you not only survive but thrive. If you’re looking for expert, impartial business advice, then don’t hesitate to contact Irwin Insolvency today for your free, no-obligation consultation.