I have to level with you. Working in business in 2022 is tough, and we need every little help that we can get to help us move into the following year. Today, the purpose of this narrative is to ask you a difficult question.
Are your income and expenses under control?
It has never been more important. Turning on the radio this week, we hear about the increased cost of living, energy prices at an all time high, and fuel costs soaring. We have an impending increase in national insurance contributions, as well as a change in the tax we pay on dividends. We have an increased national cost associated with rebalancing our books following financial support COVID schemes and the massively increased costs associated with the running of the NHS. A massive rebalance. To be clear, I would describe myself as a non-political – no allegiances to any party, so I am looking out for indicators that can help my businesses and entrepreneurial activity.
On Tuesday, I attended a call where a question was asked about the most significant risk this year (to marketing . and therefore sales). The response was two-fold
- Inflation: If you think about the value of money, inflation means that if we were to do nothing with our money, it would be worth less tomorrow. Have a play with the Bank of England calculator if you want but as an example – if I was to buy £100 of goods in 2020, they would cost £104.05 in 2021 (with an inflation of 4%). This year the predicted inflation increase is higher than this, so expect to get less for your money as we move forward.
- Our pricing policy: When was the last time you looked at what it costs to run your business. If these costs were to increase by inflation, what does this mean to your profit (remembering that profit = income less expenses). Simple right?
Your company expenses could include those subscriptions (the ones you forgot to cancel… do you have a list), travel costs (remember these?) and perhaps CPD.
A large part of your company expenses are also likely to be your earnings. When was the last time that you revisited what you pay yourself? If inflation means that our cash is worth less, should we increase our payroll to keep ahead at a personal level. Look again at the pay calculator and check in with your figures.
This invites us into a space that many of us find tricky.
Is it time to revisit what we charge out and pay our staff (and us)? With the governor of the Bank of England asking for restraint – it ios also recognised that “workers are currently enjoying pay rises of just below 5% on average, according to a Bank survey.”
There are no prizes or defence for being unaware. Perhaps it is time to pick up that stone and see what worms are moving underneath.
There is a caveat
We need to be absolutely sure about the value of our coaching/work. What is the emotional, spiritual, strategic, community, financial and human value that we create when we are working with our clients? More on this next week.
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