Earlier this month the Bank of England (BOE) raised interest rates for a 12th consecutive time as the rate of rising prices remains high. The Bank rate has gone up from 4.25% to 4.5%. The BOE has been under pressure to put rates up because it has a target to keep inflation at 2%, but prices are currently rising at more than five times that level. The rate of interest is at its highest for almost 15 years.
The BOE has been increasing interest rates since December 2021 to try to control inflation, which now stands above 10%. It looks like the UK Government will miss its pledge to halve inflation by the end of the year and the BOE has warned that the pledge may not be met until 2025. The BOE decision has an immediate impact on some borrowers and savers.
So how do you go about managing your business during these turbulent times with increasing inflation, rising interest rates, and economic uncertainty? What actions should a business owner take right now?
Take some time to look at your business’s strengths, weaknesses, opportunities, and threats and get a clear understanding of its position in the marketplace, the competition, the systems, the way things are done, and the improvements that could be made. Focus on what the business is to look like when it is “complete” or running profitably and successfully. You can then determine priorities – the big issues that need to be focussed on – and make a plan.
It is also a good idea to plan for a range of scenarios from “good to bad” so that you can be flexible about the direction your business should take.
Please talk to us about your plans; we can assist with cash flow planning and “what if” scenarios.
We have considerable experience in helping clients write plans, forecasting results and monitoring their success against goals. We would be delighted to help you and we also have access to a range of finance providers and can help your business succeed!