Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Tuesday, July 27, 2010

Will your business be impacted by Government cuts?

There has been a huge amount in the media recently about the new UK Government wanting to make very dramatic cuts in spending. It's clearly going to come, and it's clearly going to hurt (some more than others).

However ...have you seriously sat down and considered what impact it may have on your business?

A report published yesterday by Graydon, the credit reference agency, suggests that nearly two thirds of credit professionals believe that business failure rates will rise on the back of the public sector slow down. Yet, it seems businesses are just not monitoring the potential impact on their own operations.

At Insight Associates, we have already seen one client almost fail (it still might) because of reduced Government spending in its sector.

The impact may not be obvious however. It could be like a domino effect ...with difficulties in areas which seem remote from your own business flowing down and causing big issues for your customers, suppliers or business partners.

Earlier this year I heard what seemed like an amazing statistic until you think about it a bit. Apparently, 30% of all new shoes sales in the UK are purchased by the Government!  When you add up all the various services, military, health, police etc. it is perhaps not so surprising. Now think about the businesses that are perhaps in some remote way dependant on that spend without maybe even realising it!

Take a long hard look at your business, your trading relationships and your market. Understand what will happen when Government spending reduces by perhaps up to 40% ..and be prepared. You may be surprised by what impact it could have on you and your business.

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