For the last three years, UK businesses of all sizes and sectors have experienced significant financial challenges.
Just as the aftermath of the Pandemic began to ease, the UK experienced crippling inflation. Now with the possible threat of a recession on the horizon, it’s important to be aware of how these factors can affect business owners, and more importantly, what you can do to prepare.
In this blog, we’ll explore effective strategies to help protect you and your business throughout these uncertain economic times.
The impact of rising living costs on businesses
As the cost of living continues to rise, businesses find themselves facing three critical challenges:
Increasing business costs
High living costs also mean increased expenses for businesses. Wages, materials, and utilities become more expensive making it harder for businesses to maintain their usual level of operations.
For businesses that rely on export or compete in global markets, the rise in living costs can reduce their competitive edge against businesses from countries experiencing lower inflation rates. This can lead to a decline in overseas sales and market shares.
Risk of insolvency
For some businesses, mounting living costs can push them to the brink, often leading to insolvency. SMEs are particularly vulnerable, because they may lack the financial reserves needed to weather these prolonged economic challenges.
Strategies to protect your business
Despite the challenges business owners are currently facing, there are proactive measures you can take to safeguard your ventures from the impact of rising living costs.
Here are the 4 key measures you can take to protect your business:
Increase prices strategically
While raising prices may not be the most popular move, it could be necessary in helping to maintain profitability in the face of escalating costs. Business owners must carefully analyse their market and competitors to ensure that price increases are reasonable.
Be realistic about growth plans
In uncertain economic times, it’s crucial for business owners to be pragmatic about their business goals. Scaling back expansion plans can prevent overextension and reduce financial strain, allowing you to focus on stabilising your current operations.
Cut operating costs wisely
Identifying and trimming unnecessary expenses can provide immediate relief to a struggling business. However, cost-cutting measures should be considered carefully to avoid compromising essential aspects of your business, such as product quality or customer service.
Protect your personal guarantee
Many business owners, especially of SMEs, provide personal guarantees to secure loans or credit. As living costs and the threat of recession continue to loom, the risk of defaulting on these guarantees also rises. For this reason, business owners need to protect their personal assets.
The importance of personal guarantee insurance in 2023
Now more than ever, the importance of protecting your personal guarantees cannot be overstated. Personal guarantee insurance offers business owners a safety net by covering their liability should the business become insolvent or unable to repay its debts.
By having this insurance in place, you can shield your personal assets, such as your property or your savings from being claimed to repay outstanding business debts.
Personal Guarantee Insurance from Purbeck
At Purbeck, we understand the challenges and uncertainties that business owners are currently facing and the risk this presents to your personal guarantee.
As the leading provider of PGI in the UK, we offer a comprehensive solution to safeguard your personal assets.
Our policies cover up to 80% of your new or existing personal guarantee, providing you with the peace of mind and financial security you need to run your business.
Protecting your personal assets should be a top priority. If you want to find out more about how Purbeck can protect your personal guarantee, don’t hesitate to get in touch with our team today.