- Phillipa Mckernan
BECOMING THE BUSINESS OF TOMORROW
From Brexit to Covid-19 and the ongoing conflict in Ukraine, the world economy has been subjected to significant disruption in the last few years.
In the last 12 months, inflation has risen by 9.2% and interest rates have risen to 4%. This impact is heightened as global costs of goods and services such as petrol, food and raw materials have radically increased.
As a result of these severe and unpredictable increases, businesses across the world are now looking to restructure, reorganise and re-energise in a bid to remain fit for purpose in this constantly changing environment.
For many, this has meant that difficult decisions must be made in relation to commercial and consumer pricing strategies, organisation structure and workforce.
WHAT CAN YOUR BUSINESS DO NOW TO ENSURE THAT IT CONTINUES TO THRIVE?
Businesses operate in an ever changing environment which has become increasingly unpredictable in the last few years. This unpredictability has increased uncertainty and eroded confidence in the commercial market.
Whilst FG Solicitors cannot remove this uncertainty, we can assist with helping your business to quickly evaluate the options available to it. This gives you the confidence of knowing even in a worst-case scenario, there is a solution.
DO THE FOLLOWING CIRCUMSTANCES SOUND FAMILIAR?
An escalation of input costs outside of your control has drastically skewed your profit margin. You need to take immediate action to realign spiralling costs with income.
In the last year the cost of electricity has risen by 65.6% and the cost of gas has risen by 128.9%. This is combined with increases in other costs such as steel which has risen by 70% and timber which has seen a 73.3% increase in the last 12 months.
With these sharp and unplanned increases, most businesses are now having to take immediate action to regain control. How quickly your business manages to stabilise its costs can make the difference between a viable business and one that is forced to closed.
FG Solicitors can help you to identify immediate measures which can be taken to realign input costs with revenue.
For example, some of the following might be adopted as a cost saving strategy for your business:
Bespoke drafting of commercial and/or employment contracts to ensure flexibility, specifically in relation to variation and termination.
Variation of commercial contracts to increase pricing structure.
The cost-of-living increase has led to your competitors offering higher rates of pay to employees. This has caused your employees to either seek employment with your competitors or to ask for a pay rise.
The cost of employing individuals has increased by an average of 6% over the last 12 months. During any downturn or unplanned increase in labour costs, it is understandable that one thing you might consider is a reduction in headcount.
Redundancy is not always the best option. As a business, you will have taken lots of time to hire and train the right people. If you make significant redundancies, when your business recovers, you are likely to have to rehire and train individuals, which is financially costly and will take time.
Moreover, making redundancies means that the business must foot the costs in an accelerated way, as you will have to pay notice, annual leave and any redundancy payment. This acceleration of costs could result in increased financial instability for your business.
FG Solicitors can help you to identify the best solutions for your business. These might include short term pay cuts, reduced working hours or job shares to provide the employees with the option of remaining in employment.
In some cases, you might also need to source labour from outside of the UK. We have built up a distinctive competence in assisting clients to navigate through immigration requirements successfully.
A BALANCING ACT
As a business owner, you will recognise the need to implement contractual variations or workforce adjustments carefully in order to mitigate the risks of contractual breaches and legal actions being brought against you.
It is especially important that any measures taken to protect your business are weighed up against the business’ obligation and desire to look after employees and maintain commercial relationships. As this can be a difficult balance to strike, we would advise that any strategy that you adopt is carefully assessed prior to implementation in order that key relationships can be maintained.
FG Solicitors can assist your business in managing the risks of the current global climate by conducting an audit and review of your current business structure and operational requirements and creating a bespoke cost saving strategy.
ARE YOU STILL UNSURE ABOUT HOW TO MANAGE YOUR BUSINESS IN THE CURRENT GLOBAL CLIMATE?
Continue to follow our social media for our BECOMING THE BUSINESS OF TOMORROW series of articles covering the following issues and helping you to identify areas of cost saving and risk management for your business:
1. Commercial Contract Variation
2. Employment Contract Variation
3. Business Restructures and Reorganisations
4. Corporate International Immigration
If you want to speak to one of our corporate, commercial or employment law specialists about managing the risks for your business, FG Solicitors offer a transparent, pragmatic and practical approach, providing business owners with greater certainty and confidence when it comes to managing their business.
WELCOME TO A MORE CONFIDENT FUTURE!
For further details about the corporate, commercial and employment legal services and assistance that we provide, please click here. 👇
This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.