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Which way to turn

Source: Other | | 09/01/2023

Inflation and recession are cruel task-masters.

If you provide goods or services that can be readily sourced from alternative suppliers, and at a lower cost, trying to beef-up your sales prices will likely result in lost income as your customers go elsewhere. If your costs are increasing this can only lead to lower profits.

If you sell luxury goods, there will likely be a reduction in demand as customers concentrate their expenditure on meeting rising fuel and food bills.

Business owners can react by reducing their own costs but there is a limit to the saving that can be made.

There is an argument to mothball business activity. i.e., reduce activity and hibernate until market conditions improve, although this is unlikely to prove a workable strategy for an extended period.

Businesses who supply goods or services with no competition, or for goods that have no ready substitutes, are in the best position as they can increase their prices to cover cost increases with little or no impact on sales.

During this period, all businesses would be wise to take control of cashflow and scale down or at least reconsider investment activity until market conditions become more buoyant.

If you are in business and really don’t know which way to turn, please call so we can talk over your options.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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