If you are running a small business then it’s likely you are aware of the rates evaluation, changing business rates in the UK. The biggest shake up of business rates has been looming like a black cloud for some time, and now it’s here, with new rateable values applying across the UK.
The uncertainty created by Brexit, recent budget announcements and then withdrawal of national insurance contributions, and the increase in business rates all seem to point towards a government that is less protective of small businesses. Bear in mind auto-enrollment was introduced less than two years ago too, adding to the administrative burden and costs for business owners.
Against, this backcloth, the business rates evaluation is not only unwelcome, it’s a direct threat to the very existence of these businesses in the future. The timing of these increases couldn’t have been worse. There is already pressure from a weak pound, resulting in an increase in the cost of imported goods. Furthermore, as the Government prepares to press the button to commence negotiations for our withdrawal from the European Union, there is significantly more uncertainty over future trade in Europe and the overall cost of doing business.
The other issue is that the changes in the rating system does not create a uniform reaction across the country. In some areas business rates have increased up to and beyond 100%. In other areas business rates have remained the same, and a smaller number, according to the Government, have reduced. So, how does this result in a fair approach to business? It doesn’t. A business in Yorkshire may now be facing double rates which means it cannot remain as competitive, especially when competing against a business in the north east with zero increase or against a business with a large reduction in rates.
What can be done to address the increases?
There are companies offering their services to appeal against rates increases. Please beware as, with all industries, there are charlatans that promise you results for an upfront fee and fail to deliver. It may be more advantageous to select from those that offer other professional services like building surveys because you then know you’re dealing with somebody who understands the value of the building. A qualified surveyor offering these appeal services may be a safer bet, although there are no guarantees. Also, you need to be careful what you sign. Some of these so-called professional companies will charge you a fee every year rather than one off fee. I know a number of companies who have been stung with re-billing charges.
As the new rates are just about to come into force, it’s too early to tell whether appeals will be successful. The phrase “buyer beware” springs to mind.
If your business is situated in one of the more fortunate zones that have recorded either a decrease or zero increase, then you need to be thinking about building on this opportunity. Other areas in your cost base will be rising such as insurance, wages etc so you can’t afford to stand still and do nothing. A decrease in rates can be a real game changer, and you must be prepared to capitalise on this rather than waste the opportunity.
For those businesses experiencing forthcoming increases, you need to get busy. But, busy doing what?
As you would expect, it’s important to re-assess your cost base and look for areas where savings can be made. In a previous article I mentioned the need for innovation. There are tax savings on innovation, which can offset the rates increases. Innovating to reduce production time, wastage, admin time, distribution and all worth spending time and investigating.
Thinking out of the industry box is also welcome. Why not mix with other business owners in different industries. Discuss current challenges and perhaps you’ll be surprised where the answers lie. Sometimes the answers are simple but you can’t see them or haven’t asked the question that leads you to the right answer.
Consider how and where your business may be able to joint venture with another. Again, this can be in a different industry. Here’s a quick example:
Business A has weekly deliveries from the north to London. The trucks are always full travelling south and yet empty on the return journey. Why doesn’t the business owner look & see if they can find ‘Business B’ who deliver to the north weekly and see if they can work together to use the trucks. The savings to be made for both businesses are huge, with one saving the cost of a fleet travelling to the north whilst the other increases the contribution to the fuel, driver time and vehicle cost returning to the north. Doesn’t that make sense?
With this simple example to hopefully inspire you to look harder, broader than you’ve done before, I’m sure you will find opportunities for savings and income generation.
This is also a time to re-visit the four simple ways of growing a business. They are:
1) Increase the number of customers
2) Increase the average spend per transaction
3) Increase the number of transactions per annum
4) Reduce attrition
A 10% increase in numbers 1-3 will result in a 33% growth in your business. If you can reduce attrition (the loss of a customer) by a mere 5% there is huge value in this too. I have written other articles on this subject so do not wish to labour the point now. This requires a good marketing head to develop the strategies and tactics to apply successfully. If you don’t have the skills in-house, then you need to invest. Furthermore, if you invest on a small budget then do not expect to get a great return. Value a consultant and their intellectual property because the changes they suggest and can be life-changing. However, you need to ensure implementation is done to the highest level to achieve the greatest returns on this investment.
The same applies to those businesses who will experience unchanged or reduced rates. Act now. Act as if your business days are numbered. With Brexit just around the corner, it’s clear that all business owners will need to be ready to move fast, adjust fast, otherwise their business may fail. Let’s not allow this to happen.How will the rates evaluation affect UK businesses? What should your business be doing? Click To Tweet
Take action now, go deep and broad to find the answers you need and find a business professional who can help your business remain in the game and prosper.