Advice NI: Businesses should remain conservative despite positive economic signs

Businesses in Northern Ireland have long faced numerous challenges including economic uncertainty and financial instability. However, recent positive economic indicators suggest a more optimistic outlook, with signs that things are finally on the rise. According to the latest data from HMRC, the median monthly wage in Northern Ireland saw a notable increase, rising by 6.8 per cent over the past year to reach £2,192 in April 2024. This growth surpasses the annual inflation rate of 3.2 per cent, as reported by the UK Office of National Statistics. Additionally, Northern Ireland’s labour market has demonstrated resilience, with unemployment dropping to a record low of 2.1 per cent in the first quarter of 2024, according to the Northern Ireland Statistics and Research Agency

The economic changes suggest stronger purchasing power for consumers and a more stable employment environment according to Sinead Campbell, Head of Money, Debt, and Quality at Advice NI

Sinead explains, “Many small and medium businesses are under pressure as they bear the brunt of these changes. With higher wages comes increased operational costs, and it’s likely the cost-of-living crisis may continue to put pressure on profit margins.”

Below, Sinead shares strategic steps and essential advice for business owners to keep their organisation financially healthy.

Conduct a Comprehensive Financial Audit

Sinead says, “A good place to start is by reviewing your financial accounts to understand your current financial position. Identify areas where costs can be cut without compromising the quality of your products or services. Regular audits and reviews can help stop inefficiencies and allow reallocation of resources more effectively.

“This is also a great way to implement cost control measures and look for ways to reduce operational expenses. This might include negotiating better terms with suppliers, optimising energy usage, or embracing technology to automate and streamline processes. Every small saving can add up and contribute significantly to your bottom line.”

Strengthen Cash Flow Management and Diversify Revenue Streams

Ensure that your business maintains a healthy cash flow. This can be achieved by tightening credit terms, following up promptly on receivables, and managing inventory – including raw materials used in production as well as the goods produced that are available for sale – efficiently explains Sinead.

Sinead continues, “A robust cash flow will help your business withstand economic fluctuations and unexpected expenses. Consider diversifying your product or service offerings to create additional revenue streams. This can help cushion your business against downturns in specific markets and provide more stability.”

Leverage Government Support

Stay informed about government grants, subsidies, and support programmes available to businesses. These can provide much-needed financial relief and help you navigate through challenging times more smoothly, according to Sinead.

Sinead says, “If you’re unsure what support you’re eligible for, NIbusinessinfo.co.uk is great place to start. Their business support finder can help you find local publicly funded and not-for-profit sources of assistance. It also covers all aspects of funding such as small business rates relief, mentoring programmes, government backed incentives and information on grants from Invest NI.”

Plan for the Long Term

Sinead adds, “Always look ahead and forecast challenges where you can. Develop a long-term financial plan that includes contingency strategies for potential economic downturns. Regularly revisit and adjust this plan based on the changing economic landscape and your business’s performance.”

Seek Professional Advice

Engage with financial advisors or debt support services like Advice NI. These professionals can offer tailored advice and support to help your business manage debt and achieve financial stability explains Sinead.

Sinead says, “During 2023/24 Advice NI’s specialist Business Debt Advisers have managed £8.36m of business debt, signalling that we’re a great first step in finding a solution.

“Business owners can browse our website, www.adviceni.net/money-debt/business-debt, for full details of the service, and our Money Talks Help Guides which offers a host of useful online business factsheets on topics such as credit control, business rates and debt management plans. We also have a wide range of business debt letter templates which can be used if you need to write to your creditors.”

Advice NI and the Independent Advice Network is made up of 64 members and more than 300 advisers across Northern Ireland, all providing free, impartial, and confidential advice. Struggling businesses can call 0800 915 4604 or email [email protected] where they can speak directly with a business debt adviser between 9am and 5pm, Monday to Friday.

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