As the cost-of-living crisis continues, it is more important than ever that businesses can access advice and support to ensure they can navigate through the current economic climate.  

High inflation means businesses have to pay more for products and materials, and may have to wait longer for stock deliveries or even pay higher shipping costs to get it delivered. In practice, it leaves businesses with limited choices: raise prices to cover the increased costs, cut their own costs to compensate, reduce inventory, or accept a lower profit margin which in turn may slow growth. 

With that in mind, we have compiled some advice to help business owners and sole traders during the cost-of-living crisis.

Focus on accurate bookkeeping 

Accurate bookkeeping is imperative not only to inform HMRC of your financial records, but it will also tell you everything that is going on in your business. Sales invoices will tell you about the success of a product or service and whether it has been paid on time. This can be used to analyse your customer base and evaluate which products or services are doing better or worse than others. Purchase invoices will also give you further information about stock levels, fluctuations in supplier prices and more.  

With this information being so valuable, the importance of accurate bookkeeping cannot be understated for this reason. The more up-to-date and detailed your bookkeeping is, the more accurate and timelier your accounts will be.  

This means you will have the ability to shift approaches in real time and more proactively rather than completely reactively. There is little benefit to financial information that is nine months old when you are running a business and making daily business decisions.  

At Lee Coombes Accountancy, we provide efficient bookkeeping services to sole traders, small businesses, offering a jargon-free approach, which means you’ll always understand what we’re doing and why we are doing it.  


Review your financial reports 

By having accurate bookkeeping, you can also then have a clear picture of the profit and loss (P&L) figures, identifying both the turnover and expenses of the business. This information allows you to analyse how necessary certain outgoing payments are, and the value each expense brings, as well as whether your prices are appropriate to compensate for the increased costs of energy, materials and more.  

Additionally, it’s very common for small businesses to overlook their cash flow figures. Monitoring what is coming in and what is going out will help you ensure that you are not put in a financial squeeze.  


Embrace new technology and automation tools 

Having the right finance software in place can help to minimise accidental fraud, allowing finance departments to track and control expense claims in real-time. Effective technological detection solutions can be put in place for more accurate fraud checks, increasing accountability, boosting compliance and reducing human errors. Businesses can also use software to set a monthly spend amount for claims according to their budget, allowing them to analyse of which costs can afford to be cut. 

At a time when business owners need to be addressing the operational success of the company, utilising automated technology also takes the hassle away so you can focus on what matters most – your business. For example, we use financial software app Coconut, which is a simple and easy-to-use app that amalgamates expenses, invoicing and tax all in one.  

The new app includes built-in invoicing software and also allows sole traders a simple platform to send invoices whilst on the go – either from their phone or desktop. 

For more information on how the Coconut app can help your business, click here 


Review your business plan 

As a small business owner or sole trader, you may think it is over the top to have a business plan, when in fact it is a useful document as it outlines your vision for the business and how you plan on implementing this. 

Even just a one-page business plan will help keep you on track as it will address things such as: 

  • Your goals for the business 
  • Your target markets 
  • How you will promote your business 
  • How are you going to generate income 

You can then review this throughout the year to see if anything has changed, while also having accurate information to help inform these decisions and adapt your approach.  


How we can help   

At Lee Coombes Accountancy, we can help with a wide variety of taxation services, including personal tax, limited company accounts and VAT. Read more on our service offering here.   

If you have any further questions on the cost-of-living crisis, speak to our team by clicking here.