Managing the Financial Challenges of 2023-24: Strategies for Businesses and Individuals to Plan and Manage Their Finances
The year 2023-24 poses significant financial challenges to both businesses and individuals, with the rise in energy bills, high inflation, recession, and climbing interest rates. These factors place upward pressure on costs, downward pressures on sales, and for many businesses, no opportunity to increase their selling prices to maintain profitability. As a result, individuals may see an increase in mortgage repayments or rent as fixed-rate deals expire, and mortgages will have to be renegotiated at higher rates. The exceptional increase in utility and food costs will place upward pressure on household budgets.
In light of these challenges, it is essential to plan and organise finances to sustain through this economic downturn. This article outlines some ideas for countering these financial challenges for businesses and individuals.
Strategies for Business Owners to Cope with the Economic Downturn
For business owners, cash flow management should be the top priority. This is not a good time to leave hard-won sales in customers’ bank accounts. Therefore, create and enforce rigorous credit control to monitor cash inflow. In addition, postpone significant equipment purchases unless they provide immediate benefits to the business. Instead, prepare a business forecast for the next year to have a better understanding of profitability, financial net worth, and cash flow. This will help to identify any potential issues and take timely action.
Business owners should also consider meeting their obligations and take advice to see if liabilities can be reduced if profits are falling, or if they are forecast to make losses. It’s better to pick up the phone and call for advice to prepare to cope with the coming challenges.
Strategies for Individuals to Cope with the Economic Downturn
For individuals, it is essential to plan personal finances on a simple spreadsheet to see if income can meet obligations in the coming year. If there are shortfalls, take advice to see how you could reduce any shortfall and/or fund any deficits. Speak to your bank if you are using overdrafts to see if they could offer a loan with a lower rate of interest that could be used to pay off overdrafts.
In addition, individuals should consider transferring credit card balances on accounts with high interest rates to cards that offer an interest-free period. Plan repayments and seek to minimise the use of cards. Take a hard look at your use of gas and electricity and see if there are ways you could reduce dependency on either supply. Do you have an opportunity to increase your family income by creating additional income streams? For example, renting a spare bedroom or converting a hobby into a small business can create multiple income streams and protect personal finances.
The Bottom Line
Planning will be a key element in managing your difficulties over the next year. It is doubtful that any remedial action taken by the government will result in immediate improvements in our financial circumstances. Therefore, it is up to us to figure out the best way to survive the current downturn. It is essential to take action timely to identify the best strategies to adopt.
Take Action Now
We’re here to help you weather the storm. Book a call with me today, where we can review your position and generate some practical tips and strategies to help manage your finances and protect your financial future in 2023-24.