3 important ways the cost of living crisis will affect your business owner clients

As the world economy continues to experience volatility, your business owner clients could be turning to you for help, and searching for new ways to manage their finances as the year goes on.

Indeed, since 2020, businesses have experienced a plethora of challenges, as the pandemic took hold and lockdowns caused a shake-up for most businesses. As a result, according to the Office for National Statistics (ONS), business closures increased by 50% between Q3 2020 and Q3 2021.

Now, as we progress through 2022, business owners are facing new challenges. The Russian invasion of Ukraine, along with the continuing pandemic and UK inflation hitting a 30-year high in March, could be described as a “perfect storm” for business owners and their finances.

We’re living in the midst of a cost of living crisis, and business owners, as well as individuals, are weathering the storm.

Being a business owner yourself, you too could have felt some stress in response to these circumstances – and it could be that you have already turned to your Henwood Court financial planner for help.

So, if your business owner clients are experiencing similar levels of worry, it could be constructive for them to reach out to a financial professional, too.

Read on to find out three ways the cost of living crisis could affect your business owner clients, and how we might be able to help.

3 important ways the cost of living crisis could affect your business owner clients

1. Product, manufacturing, and transport costs are increasing

As you may already know, product, transport, and energy costs are increasing across many industries.

In April 2022, the BBC warned that food prices in the UK could increase, as a result of the cost of farming fertiliser tripling this spring. This is just one example of the cost of raw materials drastically rising in recent months, causing concern for business owners across the country.

What’s more, according to the Guardian, international shipping costs have quadrupled in some instances, leaving business owners in difficult circumstances as they shoulder this surge in costs.

In some cases, such as receiving goods from China, this increased shipping cost could come down to supply chain issues stemming from the ongoing Covid-19 lockdowns in the country.

When it comes to energy, the Russian invasion of Ukraine has vastly increased energy prices across Europe, and created another issue for business owners.

Indeed, the BBC reports that oil prices jumped to their highest in 14 years in March 2022, while UK petrol prices averaged ÂŁ1.55 a litre in the same month.

In light of these price increases, your clients could suddenly be facing hikes in multiple areas of their outgoings, and may need support to weather this “perfect storm”.

Working with a financial planner who specialises in supporting SME owners could provide reliable, calm guidance for your clients. This solid foundation could allow them to think clearly about their goals, and more efficiently protect their business, where possible, from these price increases.

2. Reduced disposable income could have a negative impact on consumer spending

In May 2022, the Office for National Statistics (ONS) revealed that UK inflation hit 9% in the 12 months to April 2022. As a result, the Office for Budget Responsibility (OBR) predicts that disposable income may drop to its lowest level since records began.

So, your business owner clients could experience a dip in consumer spending that might have a negative impact on their returns in the coming year.

It could be that clients who run businesses that provide “non-essential” services might experience financial challenges, as consumers tighten their purse strings and cut out certain luxuries to save money.

On the other hand, clients whose businesses provide essential goods and services, such as food, transport, or construction, could experience an uptick in profits as they take advantage of a seller’s market.

Indeed, clients could find that they are able to raise prices to reflect the rising cost of materials, meaning they might see positive returns in the coming months.

No matter whether your clients will be affected positively or negatively by a potential downturn in disposable income, it could be beneficial for them to seek financial guidance during this unprecedented time.

3. Clients could experience heightened stress levels

One of the less-discussed elements of any financial difficulty is the emotional effect it has on those experiencing it. Indeed, your business owner clients might not only be shouldering material challenges in the coming months, but could also feel significantly stressed as a result.

According to Mind, a mental health charity, financial stress can cause myriad problems for individuals, including:

  • Loss of sleep
  • Shutting out people who could support them, like friends and family
  • Feelings of anxiety or panic
  • Guilt for spending money on non-essential items.

If you are searching for ways to help reduce your business owner clients’ stress in these trying times, connecting them with a Henwood Court financial planner could be the perfect salve.

Your business owner clients could benefit strongly from holistic conversations with a financial planner who understands today’s climate, and can help them respond to it. What’s more, they could find ways to make their business’ financial situation more viable in this difficult climate.

Plus, importantly, your clients could gain valuable peace of mind, helping reduce their overall stress levels by having a seasoned expert on their side as they guide their business through new challenges.

Get in touch

If your clients are weathering the perfect storm of market volatility, reduced consumer spending, increased costs, and high stress, we can help.

For holistic, professional financial guidance, email info@henwoodcourt.co.uk or call 0121 313 1370.

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