How are you feeling about yesterday's Budget?
Small business owners will feel mixed, but mainly scared. There was a lot of worry and despair on socials last night. It feels a lot like the government are giving with one hand and taking with the other - and it will be down to our accountants to work out exactly where Three Little Birds Bakery stands with the changes. We'll certainly benefit from the raising of the employers' NI threshold, but we'll be hammered again by wage rises, and despite inflation dropping 9 percentage points since last October, this doesn't mean our tripled ingredients prices are dropping, just flattening out.
Businesses who are slightly larger than ours have very little to gain and much to lose. Anyone who employs more than around 4 full time staff faces an increase in National Insurance payments, an increase in wages, and the business rates relief is dropping 35 percentage points - albeit it's still there (we are too small to pay business rates). Finch Bakery posted an extremely honest post last night which summed up much of this in the context of the battle of the last few years we're all weary from.
So what do small businesses do now? Here are 3 thoughts.
1) Raise Prices.
I see hundreds (literally) of small businesses posting about how they don't want to raise prices for the sake of their customers. But this is entirely necessary to survive. If you haven't raised prices in the last couple of years, you probably aren't paying yourself a wage, and this is business, not charity.
The businesses that do raise prices and post about it to let customers know generally receive overwhelming support and understanding.
We went into business to solve problems and make a living, and it's time to grit our teeth and crunch the numbers to ensure we survive - if that's what you want. If we want to come through this, we have to find ways to make more money. Raising prices isn't the only way of doing this, but it's a pretty fundamental one.
We've already raised prices gradually over the last two years and we won't be raising them again any time soon, but we will be looking at introducing seasonal pricing for wedding cakes over the next few months to reflect the fluctuating demand throughout the year.
2) It's ok to close if you want.
I write a lot about how we survive, how we keep going - but you know what, it's ok to stop. If last night's announcement feels like the end of the road for you, that's ok. Our health and wellbeing is top of the list above any business, and it's not worth making ourselves ill for. If closing down your business is the right thing, do not feel ashamed or guilty about this. Your customers will miss you, but you gave them something amazing for the time that was possible. It's better to stop when the time is right then keep on throwing money and mental health at something that's ready to be wound down.
3) Get Clever.
Talk to your accountants first about how this will actually affect your financials. It's hard for the layman to work out when it's all so complex. So don't panic, do the research, ask your accountants to put the figures together and set up a meeting to get to grips with the present and forecast for the future. A lot of these changes won't come into play until April 2025, so there's time to get our ducks in a row.
I for one am quite sick of having to get clever about how to combat rising costs but hey, it's what we signed up for. One example for us is that with chocolate prices doubling, we've managed to change our brownie production to make 5 trays in one go instead of just 2, thereby offsetting the raised ingredients cost by reducing the labour.
We need to get our young people trained up even more so they're bringing in at least double the revenue of the new minimum wage rates for over 16s and over 18s next year. Now is the time to get training, and get older and more experienced staff training the younger ones as we prepare for 18 year olds to get paid £10 per hour from April, and incur the NI costs that come with that.
Talk to your teams. Keep them in the loop. Everyone knows that this Budget is going to affect things. Transparency as a team is essential. Everyone needs to be pulling together.
And what can our loyal and beloved customers do?
1) Buy stuff.
Obvious, but important. There is great power in numbers and even spending a fiver or less in a local business makes a difference, especially if more and more people do it. With the lead up to Christmas, let's all think where we can swap from Amazon and the big boys to smaller businesses.
2) Tell people about us.
Word of mouth is probably the most successful marketing strategy available to us. People prefer to take their peers' word for the quality rather than our own word for it, unsurprisingly. Spread the word, tell people about that fantastic tap room/bakery/clothes shop/upholsterer down the road.
3) Like, share, comment.
The more interaction our posts get on socials, the more people see them. It's free, quick, and it makes a MASSIVE difference. A lot of our businesses have been built off the back of social media and now is the time to keep that going.
The last blog post I wrote, which you can read here, received an overwhelming response. I don't know how much of our increasing custom over the last couple of weeks was linked to it, but we're in a slightly less terrifying position than we were when I wrote it, and for that we are truly grateful. It takes a village to raise a child, they say, and it takes a community to run a business. We're all in this together - let's remember that, when it feels so tempting to lose hope. And let's just hope and pray that Rachel Reeves goes down in history as not only the first female chancellor, but a chancellor who turned the UK's economy around and lifted the "working people" out of the mess of the last 14 years. God knows we're ready for it.
For beautiful celebration cakes that actually get eaten, visit us at www.threelittlebirdsbakery.com.
Comments