The recent increases in National Insurance (NI) contributions and the minimum wage in the UK have posed significant challenges for small businesses. The rise in employer NI contributions from 13.8% to 15% and the lowering of the salary threshold for contributions have increased staff costs. Coupled with the minimum wage hike mean businesses face tighter profit margins.
What can you do?
- Reduce Hiring and Hours: Many small businesses, especially in sectors like retail and hospitality, should consider reducing staff hours or delaying hiring plans to manage the financial strain. Opening hours should also be considered. When do you make your money?
- Price Adjustments: To offset increased expenses, can you increase prices?
- Make sure you understand your numbers: Do you know which products or services are profit making? It is easy to be a busy fool, chasing turnover but not making a profit.
- Employee Morale: While the wage increase benefits workers, pay compression might lead to dissatisfaction among more experienced staff. Have you considered this? Can you improve their morale with low cost benefits like wellness days or small gifts? Don’t forget to make use of your trivial benefits.
If you are concerned about the impact on your business and need help to work out a plan please get in touch.
