By Mark East, Partner
I regularly find myself answering questions from my clients about the future of the SME economy so I thought the best thing to do would be to write down my top five predictions for 2024, as well as some useful tax advice.
This is all speculation on my part, but after years in the profession and helping uncountable business owners and SMEs with their finances I believe I’m in a unique position to advise you on what the next 12 months might look like.
- Economic uncertainty and market volatility
The SME economy is still grappling with the lingering effects of both Brexit and the Covid pandemic.
These events introduced a level of economic uncertainty and market volatility, including sharp increase in inflation and the subsequent interest rate rise, that cannot be overlooked.
These happened on a level that we’ve not witnessed recently, and it was a shock to the system for many.
Moreover, with an upcoming general election, businesses should brace themselves for further market fluctuations.
You may need to develop flexible strategies and maintain a keen eye on political and economic developments, including the Spring Budget on 6 March 2024, to adapt your operations accordingly.
- The rise of side hustles
The rise of side hustles marks a significant trend in the economy that, again, is a novel and new phenomenon.
Platforms like Etsy, Airbnb, and Deliveroo are not just empowering individuals to earn extra income but are also contributing to the broader economic landscape.
However, this comes with new reporting requirements that could impact Income Tax obligations for many.
The Government recently announced that e-commerce platforms will now have to report directly to HM Revenue & Customs (HMRC) on the earnings of their users.
Understanding and complying with these changes will be crucial for SMEs and individuals alike.
- Adoption of generative AI
Generative AI is here. It has already become a vital part of business operations for many companies internationally and within the UK, most commonly through the adoption of ChatGPT and platforms developed from it in the months since it emerged within industry.
For SMEs, the adoption of these technologies is not just about staying competitive but also about harnessing their potential for innovation and efficiency.
However, this adoption must come with effective management and policing to ensure ethical and effective use.
With the launch of Microsoft’s own AI assistant, Copilot, likely to take place for most SMEs using the 365 platform in the summer expect further and considerable change by the end of the year.
- Changing dynamics in skills and hiring processes
There’s a noticeable shift in the labour market, with a growing emphasis on skills and experience over traditional qualifications.
This change is set to open new opportunities and diversify the talent pool in 2024. SMEs can leverage this trend to build dynamic teams that bring a wealth of practical knowledge and skills.
Soft skills, like talking to clients and working well collaboratively, I predict, will be the new desirable asset for employees in 2024.
Recruitment and retention continue to be a challenge for many businesses, especially as staff continue to look elsewhere for better culture, benefits and pay.
- Increased demand for job flexibility and remote work
Covid saw a rise in remote working and hybrid arrangements, and this still hasn’t gone away.
Despite some industries attempting to force staff back into offices or worksites, it often hasn’t been successful. Staff have often voted with their feet and moved to an employer that does offer greater flexibility.
Therefore, the change presents both challenges and opportunities for businesses, who are as new to the idea of remote working as their staff – even if hybrid working has become widespread in the last four years.
As such, adapting to these preferences can lead to increased productivity and employee satisfaction, but it requires thoughtful implementation and management.
Obviously, not every industry can provide remote working, but a more flexible approach to when people work could have benefits that provide a bigger impetus than pay to retain the right people.
How to have a successful year
In light of these predictions, I suggest that SMEs do two important things.
First, get your tax affairs in order early!
Proper tax planning can help you navigate through the complexities of new tax regulations and income streams that might affect your plans later in the year.
Plus, isn’t it better to have peace of mind that your tax compliance is in hand, knowing that you can focus on running your business for the rest of the year?
Secondly, I think increasing liquidity should be a priority.
Having more cash available not only buffers against possible crises but also positions businesses to take advantage of investment opportunities as they arise.
Increased liquidity might give you the ability to adapt quickly, to be agile, to change your plans on a whim – all of which will be very valuable this year.
Feel free to email me with any questions you may have about my predictions. I can always talk you through some financial strategies to help out this year.
Email: markeast@mooret.co.uk – Tel: 01733 560160