When you’re looking to save money for your business, you can open a business savings account. Business savings accounts can come in many different types and can provide a variety of benefits. You should consider the length of time you plan to invest and the rate of interest to choose the account that is most beneficial for your needs. Before you open a business savings account, compare the features, eligibility, and interest rates of several options to determine which one will be most beneficial for your needs.
Budgeting for a recession
If you own a small business in the UK, you know how difficult it is to save money. With energy and food costs rising at record rates, saving has become an almost impossible task. On top of this, the Bank of England has announced that the UK will enter a recession this year. In response, they have raised interest rates to their highest level in 27 years. While this isn’t surprising for larger companies, it’s bad news for smaller businesses that are struggling with the cost of living crisis.
The UK economy is expected to grow by just 3.6% this year, and will contract to zero by the end of 2023 according to the Organisation for Economic Co-operation and Development. That means the UK will be one of the slowest growing G7 nations. Meanwhile, consumers are reducing their spending, causing the economy to shrink. This will have a major impact on the economy, as consumers are responsible for two thirds of GDP. In the UK, the economy shrank by 10% in 2020 due to Covid lockdowns, which led to a drop in consumer spending.
While a recession can be scary, it can also be an opportunity. With less money coming into the economy, businesses must reduce costs. Fortunately, it can also lead to good deals for buyers, as there are fewer buyers than sellers. And with lower sales, businesses can offer more services for less money.
Reducing energy costs
As the UK’s energy price rises, small businesses are stepping up their efforts to reduce energy costs. The government is introducing a PS40 billion ($46 billion) package to help businesses reduce their energy bills. Small businesses employ nearly three-fifths of the UK’s workforce, and many are struggling to keep up with rising energy costs. Some businesses have reported energy bills more than doubling.
The government is also providing ongoing support for business that are particularly vulnerable to rising costs. This support is intended to last at least three months, and will include payments to energy suppliers of the difference between the new lower retail price and the current retail price. In addition, the Government will also provide funds for schemes that were previously funded by green levies.
Businesses in the manufacturing sector are also suffering. Almost half reported 100% increases in their electricity bills in the past year, and 53% expected similar increases in the next year. Because of these rising costs, many firms are scaling back their production. Twelve percent of manufacturers have already cut jobs because of energy price hikes. If energy prices rise by 50% or more, even more drastic action may be necessary.
Using alternative financial service providers to save money
Many businesses are finding it increasingly difficult to cope with fast-rising costs and tight cash flows. Using alternative financial service providers can be a smart move in this climate. These financial providers are fast-growing and offer a range of benefits, including the ability to save money in the long run. In fact, one in five businesses in the UK are considering closing down due to their financial situation. Furthermore, three quarters of businesses are finding it difficult to carry out business operations in these tough economic times. As a result, a perfect storm of negative drivers is disrupting business across the UK. These include the lingering effects of the pandemic and Brexit, labour shortages, and rising inflation.