Your longest-standing customer rings on a Thursday afternoon. They’ve won a big project and want you on it. It’s the largest order you’ve had in years, but it means taking on two more people, leasing another van and carrying the material costs for at least six weeks before the first payment lands. They’d like an answer by Monday.
You’ve got a gut feeling, last year’s accounts and a weekend to think it over.
Most SME owners make decisions like this more often than they’d admit. Some are big, such as a new hire, a second site or a loan. Others look small, such as a price you agree on the phone or a bulk order from a supplier offering a discount. Each one can affect your profit, your cash and how well you sleep, and most get made alone, in a hurry, between other jobs.
In this article, we’ll look at why decisions get harder as your business grows, what a poor one can cost and the practical ways a business adviser can help you make better calls.
Why decisions get harder as your business grows
In the early days of your business, most decisions sat in your head. You knew every customer by name, you knew roughly what each job cost and you could watch your bank balance change from one week to the next.
Growth changes that. Once you’ve got staff, several suppliers, finance agreements and perhaps more than one site, each decision touches more parts of your business at once. Hiring someone affects payroll, pension contributions, capacity and, sooner or later, the kind of work you can take on. A new contract can change your cash flow, your VAT position and how much stock you need to hold.
Picture a manufacturer weighing up investing in a second production line, or a farm thinking about converting a barn into holiday lets. Both decisions involve money up front, income that arrives later and a long list of costs that are easy to underestimate.
At the same time, you’ve got less time to think. The bigger your business gets, the more your days fill with staff questions, customer calls and problems that need sorting now. So, the decisions with the highest stakes often get the least attention.
What a poor decision can cost you
Most bad business decisions don’t look bad at the time. They usually look sensible, based on the information you had when you made them. The trouble tends to show up months later.
A contract priced a little too low might keep your team busy all year without adding much to your profit. A hire made a quarter too early could squeeze your cash just as a quieter spell arrives. Equipment bought a few weeks after your year-end, when it could have been bought a few weeks before, might mean waiting longer for tax relief.
There’s a less obvious cost, too. Plenty of business owners hold back from a good opportunity because they can’t see clearly whether the business can afford it. Caution can be the right call, but it’s worth knowing when you’re being careful and when you’re short of the information you’d need to say yes.
Giving you figures you can rely on
Your annual accounts are useful, but they arrive months after the year they describe. Once they land, prices have often moved, staff have come and gone and your biggest customer may be buying less, or more, than before.
A business adviser can help you put regular management information in place, so you’re working with the most up-to-date numbers. That usually means a monthly view of your profit, cash position, what customers owe you and what you owe suppliers. It can also mean breaking your margins down by job, product, customer or site, so you can see which parts of your business are paying their way.
None of this needs to be complicated. A few clear reports can tell you far more than a full set of accounts once a year. And when a big decision lands on your desk, you’ll have a starting point you can trust.
Testing a decision before you commit
Almost every business decision comes with a ‘what if’.
What if the new customer pays at 60 days instead of 30?
What if the contract starts three months late?
What if sales dip in the year you take on the extra lease?
A business adviser can help you answer those questions before any money changes hands. Using your own figures, they can model how a decision might affect your profit and cash over the next 12 to 18 months, then change one assumption at a time to see what happens.
The result isn’t always a yes or a no. Sometimes, it’s a better version of the same decision, with terms and timing that suit your business.
Showing you the tax side of a decision
Many everyday business decisions have an impact on tax that’s easy to miss when you’re focused on the commercial side. Your accountant might spot it, but often only after the event, when there’s nothing left to change.
For example, timing when you buy equipment or vehicles in relation to your year-end can affect when you get tax relief on them. The way you take money out of the business, through salary, dividends or drawings, can change how much tax you pay personally. And as your business grows, the structure it started with may no longer be the best fit.
None of these are loopholes. They’re ordinary decisions with different results depending on how and when you make them. It pays to talk your own circumstances through with an adviser before you act, while all your options are still open.
Getting an outside view
When you’re in your business every day, it’s hard to step back and see it as an outsider would. The customer you’ve always worked with, the price you’ve always charged and the way you’ve always done things can start to feel fixed. A good business adviser will ask the questions nobody inside your business is asking.
Why is that job priced the way it is?
What would happen if your biggest customer left?
Is now the right moment, or would next spring be better?
This can help in family-run businesses, too, where partners, parents and children don’t always agree on the way forward. A neutral voice with the figures in front of them can take some of the heat out of the conversation and help everyone focus on the facts.
Decisions worth talking through with an adviser
You don’t need to run every choice past your accountant. But some decisions are worth a conversation before you commit:
- Taking on staff. A new hire costs more than a salary once you add employer’s National Insurance, pension contributions and training.
- Pricing a large contract. Check that the price covers your true costs, including overheads.
- Buying or leasing equipment. The choice can affect your cash flow, your tax and your borrowing.
- Taking on finance. Make sure the repayments fit your cash flow in quiet months as well as busy ones.
- Moving or adding premises. Rent, rates and fit-out costs can add up fast.
- Changing your business structure. It can affect your tax, your personal liability and your admin.
- Planning to step back or sell. The earlier you start, the more options you’ll usually have.
How Buckler Spencer can help
At Buckler Spencer, we’ve been working with businesses across Swadlincote and South Derbyshire for more than 50 years. Our clients include farms, building firms, manufacturers, retailers and professional practices, so we’ve seen how decisions play out in all kinds of businesses.
We’re proactive by nature. We’d much prefer to talk a decision through with you before you make it than explain its consequences afterwards. That might mean a quick call about whether you can afford a new hire, a forecast for a contract you’re pricing or a meeting to look at where your figures are heading before your year-end.
Our team is easy to reach, and no question is too small. Nobody will make you feel daft for picking up the phone to ask, ‘Can we afford this?’.
Our aim is to help you maximise your wealth, minimise your stress and make the most of every opportunity. So, if there’s a big decision sitting on your desk, get in touch for a friendly chat.