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Discover leading insights from our finance experts at The Finance People. Use this financial advice to enhance your strategy, to overcome common financial challenges within SMEs, or to better understand key areas of finance for business. 

SME Finance Predictions for 2023

How are SME owners planning their finances for 2023?

This year has been a challenging year for many SMEs and it looks as though the new year is going to come with further challenges. But with challenges comes opportunity - and it's important we focus on how to best leverage the year.

So what will business owners be focusing on in 2023? What are the main areas our FDs will be prioritising for our clients? We've spoken to our clients and Finance Directors at The Finance People to pull together the biggest trends amongst SME owners that will lay the foundation for success in 2023.

Small business succeeding during recession
'Working economically and efficiently in 2023 will be a huge focus'

An increased focus on management information

Due to a turbulent economic environment, there will be an increased focus on management information. We expect this focus to be largely within Q1 and Q2, with some businesses opting to deep dive in January, while others will wait for April following the end of the financial year. Regardless of the time of year, this will still result in business owners focusing their attention on cash flow figures, revenue and profit in Q1.

It can be difficult for an SME owner to keep track of their figures this clearly, particularly when they're also spinning so many plates and therefore, a common topic of discussion we have with business owners is the lack of visibility they have. Recruiting a finance director to take care of this can alleviate a lot of pressure on the business owner, by simply providing the information required to evaluate the numbers and make informed business decisions.

Unfortunately, a lot of SMEs do not have the budget available for a full-time finance director, which we imagine will only become more of an issue over 2023 and the uncertain economic climate. With many companies making cut-backs, it might not seem like the right time to be investing in recruitment, but the finance people have flexible and affordable options to suit the business requirements and budget, such as part-time FD’s.

Emphasis on risk management

If there is one good things to follow the last 6 years of challenges, it is that business owners have never been more prepared to deal with risk. Brexit, GDPR, COVID-19 and the Ukraine-Russia war have effectively backed SMEs into a corner and forced them to overcome risks and to dedicate time and resource to risk management.

Previously, you would be hard pressed to find a SME who had set themselves up to manage a global pandemic, but now the opposite is true with the majority of businesses including this scenario in any risk management plans. Additionally, for 2023 many business owners will be focusing on risk management associated with inflation.

Building an in-depth risk management plan is essential to surviving recession and achieving business objectives. Dedicating the time to define your business objectives while considering risks ensures that your business objectives are realistic and achievable. If your business could benefit from a risk-free future via a risk management plan, get in touch with The Finance People today.

More and more SME owners planning their exits

We always recommend for business owners to have an exit plan, and this certainly won’t be changing in 2023. No matter the economic situation, exit plans are a great way to prioritise business development and prepare yourself for your own financial success in future. However, with the current economic climate, it is a smart decision to get yourself prepared for if you do find yourself wanting to move on in the near future.

The current economic situation is the result of multiple factors, including Brexit causing challenges to bring in goods, and the COVID-19 pandemic resulting in many people wanting to work from home or otherwise change the business structure or processes. If you would like to read more on the causes of the current economic climate, you can read our blog: Why do SME's need to take extra precautions in the UK recession?

Of course, building an exit strategy is crucial as eventually you will need to exit the business, whether that be for profit or retirement. But, an exit strategy can also assist you with keeping on track with goals and objectives for the business, as well as showing future buyers that the business is a well-organised and positioned ready for sale.

A lot has changed following a rocky few years, and many business owners feel they are not getting what they want out of their business anymore and are looking to implement their exit strategies. If you are ready to plan the sale of your business but have not made an exit plan then there is no better time than the present. All of our FD’s at The Finance People have experience in creating exit plans and are well equipped to guide you through this process - get in touch to get started.

If not exiting, the focus is on scaling

For those companies willing to navigate rocky waters, the focus will be on scaling. Naturally to scale an SME will be looking to raise funds and seek investment, which may be harder to come by during recession as lenders tighten their belts. We advise clients who come to us looking to scale, to seek expert help to increase the likelihood of a successful application.

Working economically and efficiently in 2023 will be a huge focus, with many SMEs likely to increase their investment in automation. The New Year will also see a continued increased focus on customer experience following digitisation, including the use of chatbots and lightening fast access to goods and services.

We are also expecting to see a huge increase to investment in marketing and new technology in 2023. For those business owners who would prefer to put their energy into growth, consider outsourcing accounting, finance and cash flow responsibilities to the experts at The Finance People. With an abundance of experience in these tasks, it will free up your time to focus on growth and scaling your business through 2023.

If your start-up or SME requires the guidance from our seasoned finance experts then reach out to The Finance People for a free consultation to see how we can support you through 2023 and beyond.

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