A leading West Midlands accountancy firm says it has seen an uplifting increase in the number of start-up companies emerging up and down the country at a time when recession, unemployment and business failure are in the headlines.
Steven Harcourt, director at Prime Accountants Group, said the pandemic has changed the business landscape and company owners need to be more cautious of their planning and marketing strategies more than ever before.
Prime, which has offices in Solihull, Birmingham and Coventry, says many entrepreneurs are hoping to capitalise on the economic recovery, but still need to focus on the ‘why’ they are going in to business; defining the business goal, what their competitive advantage is and the culture they are developing.
Steven said: “The pandemic has impacted how businesses function on a daily basis. Not all start-ups will require permanent office spaces, for example, so it is important that your business is agile and not tied to contracts too tightly.
“If you are looking at setting up an office space for example, understand what the building costs are, including rent, management fees and utility expenses and aim to work with landlords that are offering more flexible leases.
“Taking this approach will help you with cost savings and allow you to only spend cash where required to set up the business in line with the long-term vision. It will also favourably impact your business investments and growth plans as you develop.
“Business plans and models made pre-pandemic will need to be re assessed, as it is important to note that although remaining restrictions may well soon be lifted customers will still have health and safety concerns and will make purchase decisions accordingly.”
With the economic impact of the pandemic effecting all sectors, the UK government has introduced a number of tax incentives which Steven says new business owners need to consider closely in their financial plans.
“The Kickstart Scheme provides funding to create new jobs for 16- to 24-year-olds at risk of long-term unemployment on Universal Credit,” added Steven.
“Employers of all sizes can apply for this funding which covers 100 per cent of the National Minimum Wage, or the National Living Wage depending on the age of the participant, for 25 hours per week for a total of six months.
“It also includes associated employer National Insurance contributions and minimum automatic enrolment pension contributions, both of which can help business owners attract more talent.
“Employers can spread the job start dates up until December 31, 2021 and you’ll get funding until 30 June 2022 if a young person starts their job on or before December 31, 2021.”
“Companies can also take advantage of the new ‘super deduction’, tax relief based on capital investment. The super deduction gives relief at 130% of the qualifying cost compared to the usual 18% writing down allowance, for investment in plant and machinery assets. The relief is used to offset taxable profits and is available on expenditure for the period April 2021 to March 2023.
Steven further discussed the importance of setting up the right systems and practices. He said: “The pandemic has meant that most customers look for their services online rather than in a physical store, so it goes without saying that investing in IT, a good website and online platforms is more important than ever.
“My advice to business owners is to use this time wisely to set up a website and social media pages that will go a long way in promoting and growing their business and giving them a strong digital identity.”
“Also, finding an accountant at the onset of their business journey is something start-up owners often overlook. However, this is critical to get the structure of the company right to achieve business goals efficiently, to take care of their financial requirements and also meet statutory obligations.
“Getting expert advice right at the start will not just help you keep on top of your finances as your business develops but it can also help your business planning and cash flow modelling, which will help focus on costs involved; highlighting particular pinch points through the year.”
Steven says that certain elements of business planning remain true to the time before Covid-19. Market research and understanding what makes your end customer tick are important factors that still need to be given high importance today.
“So, whether you’re still in the planning stages, or you’re building back up after a difficult year, these handy tips will encourage business owners to be brutally honest with themselves and ensure they are ready for whatever the future holds,” he added.