Recent reports in the Irish media suggest that a ‘big bang’ in terms of insolvencies may be on the horizon for Irish businesses. This expected increase in insolvencies is likely to impact the SME sector most, with many family and owner-managed businesses bearing the brunt.
A number of factors are increasing the cost pressures on family businesses. These include supply chain pressures, increased energy costs, rising inflation and interest rates, and wage inflation. Collectively, this translates to reduced profits and threatens a business’s viability. In addition to these direct challenges, the cost of living crisis is also impacting household income and customer spending, and therefore many family businesses will be struggling to maintain sales in the current climate.
The government provided some support to businesses in the recent Budget by way of the Temporary Business Energy Support Scheme, yet additional support measures may be needed to assist family and owner-managed businesses as well as households to lessen the impact of issues being faced.
To weather the storm, direct action may also be needed by business owners. In the current environment, it would seem appropriate for businesses to consider implementing a cost reduction strategy to better utilise the limited resources available. Cutting costs often requires tough decisions and delicate trade-offs as you don’t want to impact your ability to grow the business.
Here are a number of areas to consider to manage costs.
A business owner will have their own ideas on how costs can be reduced, typically with a reduction of staff being the last alternative. A combination of the above measures may help to reduce business costs and may help with financial planning for the short and longer term, to ensure that a business can act appropriately and react to growth opportunities.
We have a team of experienced business advisers and insolvency practitioners who work with businesses to advise on the best course of action, depending on your particular circumstances. You may want to talk to us if you are dealing with the following:
Our team can help on a range of things:
Please get in touch with Declan Hanly or Aiden Murphy from our insolvency and corporate recrovery team, or your usual Crowe contact, to find out more.