In the UK, several changes for businesses are coming into effect in April, following on from the Budget last autumn. According to a survey by the British Chamber of Commerce, 82% of business leaders say their business will be impacted. Sabby Gill, CEO at Dext, explores how SMEs can manage their business finances for the year ahead.
Following the Autumn Budget, several changes will be made from April 2025 which could put business owners in a state of financial flux.
This includes changes to the National Minimum Wage and increases to the National Insurance employer contributions. According to a survey by the British Chamber of Commerce, 82% of business leaders say their business will be impacted, specifically in the areas of recruitment (58%) and prices (54%), with business leaders saying they’re sitting on a ‘powder keg of costs’.
Adding to this is the upcoming Spring Budget which comes with expected tax rises and spending cuts, which will both add more pressure to the economy.
While economic uncertainty isn’t new, these come at a pivotal moment for how business owners manage their financial processes.
Throughout this year the leading trend for business owners will be either shifting to or optimising their financial processes. With real-time data to hand, leaders will be able to make smarter, quicker decisions in an unpredictable landscape.
This will unlock accurate scenario planning for businesses enabling savvy leaders to effectively navigate uncertainty and spot opportunities, therefore setting themselves up for success in years to come.
Incorporating AI technology into financial planning
As AI and automation become more effective, now is the time to embrace digital tools that can give an accurate and real-time picture of a business’ financial health, including a view of how external pressures may create crunches or, for some, opportunities.
This is where scenario planning also comes in. Using insights built from data, business leaders themselves or working with their accountant, can take the following steps:
Identify key risks
To stay ahead, businesses need to pinpoint the biggest risks – whether that’s market volatility, supply chain vulnerabilities or regulatory changes – that could truly throw a wrench in operations. Alongside looking at short-term factors, businesses must ensure they’re analysing the long-term shifts in broader areas such as society, economics and technology. Not all risks are created equally so it’s vital to focus resources on the threats with the greatest potential to impact the business.
Develop diverse scenarios
Facing fear of the unknown is tough for a business owner, but we’d encourage them to embrace this uncertainty and plan for different scenarios, from the most optimistic (i.e. price hikes with little impact on demand) to the worst case (i.e. staff layoffs and downsizing), along with a middle ground (i.e. non-essential spending cutbacks). Ideally, it’s best to keep this to roughly three to four scenarios to avoid the risk of falling into the trap of analysis paralysis. Ultimately, by covering a number of bases, leaders can ensure their business is agile enough to proactively tackle challenges head-on, rather than waiting for circumstances to dictate a response.
Engage stakeholders
By involving their employees, partners, accountants, bookkeepers and investors in the scenario planning process, leaders are not only crafting a more robust plan, but they’re also establishing a collective sense of readiness. This alignment accelerates decision-making and ensures that when fast execution is needed, the business is primed to respond effectively and with confidence.
Establish and track key indicators
Identify the critical financial and operational metrics that indicate when things are really shifting in the business. By setting clear benchmarks for each key metric and establishing alert thresholds to signal any unusual changes, leaders can instantly spot emerging issues or opportunities, positioning the business for swift, precise action exactly when it’s required.
Test, analyse and improve strategy
Don’t just stick to one plan – where possible, stress test different approaches and see what works best in different scenarios. Regularly analyse results digitally to identify any gaps and be proactive about implementing any improvements. By understanding what’s working and what’s not, approaches can be refined to ensure the business stays on course, no matter what changes come.
Leverage digital tools
Implementing live tracking tools like digital dashboards and advanced analytics software, as well as automating processes, are crucial for delivering ease and efficiency when monitoring key metrics. This is especially effective in areas such as bookkeeping, where automated systems can consistently update financial records, ensuring instant access to the most current data. These real-time insights empower leaders to identify changes quickly and refine strategies on the fly, helping to keep the business optimised for success.
Adapting to thrive in 2025
Although the economic climate for the year ahead presents some financial challenges for business leaders, SME owners who lean into data-led scenario planning will be best positioned for stability and even growth.
