Positive Economic Outlook

2019 was a turbulent year for many SMEs. Political complications, international trade disputes and uncertainty surrounding Brexit all contributed to business struggles last year and beyond. Fortunately, our situation is beginning to clear up: businesses finally know where the country stands with Brexit, the USA and China have signed a trade deal and the wider economic outlook is beginning to look positive again.

This is not to suggest we won’t encounter complications in the remainder of 2020, which makes it all the more important for businesses to have a stable plan in mind for budget allocation over the next 11 months.

Of course, a specific outline of exactly where a business budget should be allocated depends entirely on the context of the organisation and what its plans are. But in terms of general advice,  here is a lot you have to consider when sticking to a tight, stable budget.

Here are just four main factors any budget allocator should be bearing in mind:

Anticipate the worst

For a start, it’s always a good idea to anticipate global or national events which might impact your business. For example, the Chancellor’s statement, usually conducted in Springtime, could introduce new legislation, trade laws or funding restrictions to a variety of different industries.

Therefore, it’s always a good idea to expect the unexpected – keep a certain percentage of your budget to the side as insurance in case of a major market catastrophe or unforeseen event.

Stable marketing

Next, consider your marketing budget carefully. If you operate an organisation which rides peaks and troughs in terms of profitability throughout the year, it’s never a good idea to blow a marketing budget on one glamourous project.

Instead you should anticipate any given low points, or when history dictates marketing campaigns are most affective for your line of work and allocate spending accordingly.

Cut the slack

There is a trend amongst some SMEs to create an illusion of success at the first signs of profitability (which I would certainly encourage), but there is no need to unnecessarily splurge on significant outgoings such as bringing in a team of high-paid execs, or moving to overpriced offices. Instead, try investing in the training of existing employees, or opting for business storage solutions as an alternative to high-priced offices space.

Seeking external investment

SMEs should see 2020 as a year of high growth, and in many cases, if an SME wishes to flourish, its owners must consider opening the doors to external investment. Private equity investment serves many different functions in a range of different situations, it can be a lifeline, a stabiliser or a facilitator of growth. Despite a reputation often tarnished by negative press, the right private equity firm can be just what a high-potential SME needs to reach its next level.

Interested?

Get in touch today with one of the world’s leading private equity firms

CONTACT US