2024 Outlook for Business Owners - By James Murray
As we enter 2024, business owners have some challenges and opportunities on the horizon. With the right planning and perspective, you can position your company for success despite the uncertainties. Here are a few things that should be on your radar for the coming year...
Tax Obligations
With corporate and personal tax bills coming due, I advise our small and medium size businesses to get ahead of planning and to consider options like:
- Securing financing to cover a large VAT or tax payment rather than draining cash reserves. Short term financing can act as a bridge to defer payments while maintaining operations, but this should be used judiciously rather than willy-nilly. The goal should be strategic tax planning, not just kicking the can down the road.
- Structuring asset financing to take advantage of VAT deferrals. This allows you to defer VAT payments on purchased assets for up to 3 months, which can ease immediate cash flow strains.
- Developing a long-term tax strategy rather than just short-term patches. Work with your accountant to improve tax planning and avoid recurring issues.
Economic Projections
Many economists anticipate inflation falling in 2024 but living standards stagnating until the general election later this year. This could dampen consumer spending and business investment. Prepare for potential slowing demand or reduced access to capital.
After years of pandemic and war related supply chain disruptions, bottlenecks began clearing in 2023 and may continue improving in 2024. I work with many local manufacturers here in Lincolnshire who have already benefited from these improving supply chain conditions. Production and distribution across the nation could continue to become more reliable. This stabilisation may ease shortages, resulting in reduced costs for raw materials and shipping.
The improved supply chain conditions may allow some businesses to lower prices that were previously inflated due to scarcity. However, if demand outpaces supply chain improvements, prices may stay elevated. Review your specific suppliers and distribution channels to assess if you can benefit from expanding output at lower cost. Be ready to adjust pricing strategies depending on how supply dynamics shift in your industry.
Forecasts indicate the Bank of England may further reduce their base interest rate over the course of 2024, potentially to around 3.75%. This downward trend in rates could facilitate increased business and consumer borrowing. Lower rates make financing major purchases or investments more affordable.
Lower financing costs provide opportunity to borrow, but savers lose accumulation on deposits. Prepare for knock-on effects both positive and negative as rates shift.
Election Uncertainty
The looming general election towards the end of 2024 creates some uncertainty for businesses. No one really knows what will happen, but one thing is certain - uncertainty isn't great for economic growth and confidence. Whatever the outcome, it's important to recognise the potential impacts and try to prepare your business strategy.
Consider possible scenarios under different election results and how policies could affect your company. Evaluate risks and opportunities so you can adapt more nimbly. While the specific result is unknown, advanced planning for potential outcomes will put your business in the best position to respond. Being proactive and flexible will provide an advantage during a period of political instability.
Here are some examples of how you can practically prepare your business:
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Monitor policy announcements and proposals from all major parties. This will give you insight into what changes may occur.
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Model different policy scenarios and how they could financially impact your business, both positively and negatively. Quantify the potential effects.
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Identify any upcoming major business decisions that may be influenced by policy shifts, like large capital investments or hiring expansion. Consider options that retain flexibility.
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Review existing contracts or agreements that may be affected by new regulations. See if any can be renegotiated if needed.
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Diversify risks where possible in your planning. For example, have multiple supply sources rather than just one that could be impacted.
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Keep sufficient reserves and access to capital so you can smoothly adapt to changes post-election.
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Maintain strong relationship with your finance providers and advisors. They can provide guidance in responding to changes.
In summary, 2024 will likely present ongoing challenges for business owners, but proactive planning and financial management can put you in a stronger position. With pragmatic preparations, many businesses can still find opportunities for growth despite the uncertainties.
As your local finance brokerage in Stamford Lincolnshire, I'm here to help companies across Peterborough, Rutland, and the wider East Midlands area, adapt and succeed in the year ahead. Please feel free to reach out if you have any questions or would like to talk more about the topics related to this article.
Thanks for reading.
James
Disclaimer: This blog post is intended for informational purposes only and does not constitute financial advice. All information is collated at time of writing and the best efforts have been made to ensure accuracy.
About the author
Meet James, the founder of James Murray Finance. With nearly two decades of industry experience and seven years dedicated to the finance sector, James has worked with a wide range of businesses, from startups to established enterprises. Read More >
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