As the cost of living rises at home, market volatility and supply chain issues continue to cause severe problems abroad. Amid a slow pandemic recovery, recent economic shifts will only add to the pressure on your business owner clients.

Keep reading for a look at three ways your clients could be struggling over the coming months and how we can help them to better manage their financial and emotional wellbeing.

But first, a closer look at the current economic climate, its causes, and its challenges.

Rising costs in the UK have been exacerbated by the war in Ukraine

The Office for National Statistics (ONS) recently confirmed that inflation had a reached 9.1%, marking a 40-year high.

The main reason for the rise was the increase in the energy price cap – up 54% in April with another rise of around 32% expected in October.

With international economies already struggling to recover from the coronavirus pandemic, Russia’s invasion of Ukraine has caused added disruption to global supply chains and production. Soaring fuel prices have increased transport costs for businesses too.

News of the so-called “great resignation” will be causing sleepless nights for some business owners, as post-pandemic shifts lead workers to look for a greater work-life balance. The ONS reported last year that business closures for Q3 2021 were 50% higher than for the same period in 2020.

3 ways professional financial advice can help your business owner clients now

1. Financial advice can help to relieve stress and provide peace of mind

Back in 2020, Royal London published an updated report on the benefits of financial advice. Alongside the economic advantages, it also found that one of the top three benefits was peace of mind.

In the current economic climate, the importance of financial wellbeing can’t be understated.

At the onset of the coronavirus pandemic, the ONS reported that nearly half (49.6%) of UK adults reported “high” levels of anxiety. Financial concerns after two years of the pandemic, followed by rising household fuel bills, a cost of living crisis and war in Europe could lead to spikes in anxiety for many.

With our combined decades of experience dealing with global markets and advising businesses, we can offer a calming voice and the objectivity needed to help your clients stay calm.

2. Decreased consumer spending could affect profits

Whatever the direct effect of the cost of living crisis on your clients’ businesses, the next few months are likely to be challenging.

In its ‘Monetary Policy Report’ in May, the Bank of England confirmed that it expects inflation to continue rising, peaking at around 11% later this year. The Bank predicts that inflation won’t drop back to its own 2% target until 2024.

This will influence the prices of the components your clients buy, the transport and import costs associated with these materials, and the prices that your clients can charge.

It will also affect the disposable income of your clients’ customers.

The Resolution Foundation recently reported that the number of Brits experiencing absolute poverty will rise by 1.3 million in the next year.

As a rising cost of living puts the squeeze on UK households, consumers will likely have less money to spend. Understanding the impact of this on their businesses will be key for your clients.

3. Rising production and transport costs increase the need for regular reviews

In October 2021, a microchip shortage led to the price of second-hand cars rocketing. More recently, the Guardian reported on a strike among South Korean truckers demanding minimum pay guarantees as petrol costs continue to rise.

The strike is expected to delay the production and transporting of essential microchips once again.

Back in March, meanwhile, the BBC reported on the effect of the war in Ukraine on Essex farmers. A large exporter of fertiliser, Russia’s invasion has seen prices treble in recent months. This is a major contributing factor to the rising food prices on our supermarket shelves.

While some of these issues are a hangover from the coronavirus pandemic, government grants and support have long since stopped. With transport costs remaining high and delays to essential components continuing, keeping on top of budgeting is key.

Professional advice could help guide your business owner clients through a difficult time, helping to review both their company and personal financial plans, keeping them on track despite the current crisis.

Get in touch

The sharp rise in our cost of living is putting the squeeze on UK households and leading to financial stress for business owners and consumers alike.

If you have business owner clients who would benefit from short-term help to navigate the current cost of living crisis or longer-term financial advice, please get in touch. Email or call 0116 240 7070.