Category: Business Support

Why exit planning matters – even in the early years of your business

Starting and growing a business is an exciting and demanding challenge. It is easy to focus all your energy on immediate goals like winning customers, generating income, and keeping cash flow under control. But at some point, every business owner will exit, whether through sale, succession, or closure. That is why having a clear exit plan is not just something for later; it adds value from the very beginning.

An exit plan sets out how you intend to leave the business and what outcomes you want to achieve. It might include selling the company, handing it over to a family member or management team, or winding it down in an orderly way. Crucially, it also considers what steps you need to take in advance to make that possible.

Without an exit strategy, business owners can end up underprepared and undersold.

Many discover too late that their business is not ready to attract buyers or that its value is too tied up in their own efforts to run it. Others face difficult decisions when ill health, retirement, or unexpected events force them to exit without a plan.

By contrast, owners who start preparing early can take practical steps to increase business value, reduce risk, and make the eventual transition smoother. This might include documenting key processes, developing a strong management team, reviewing ownership structure, or getting clear on financial performance. These are all steps that can help a business run more effectively in the present as well as the future.

Exit planning also helps you stay focused on what success looks like for you. Whether your aim is to achieve a target sale value, create a legacy, or secure a comfortable retirement, it gives you a measurable goal to work towards.

Reviewing the exit plan every few years ensures it stays aligned with your business’s progress and your personal circumstances. It can also highlight gaps or opportunities to make the business more attractive and resilient.

In short, having a plan for how you will leave your business is just as important as how you start it. If you have not yet created or reviewed your exit plan, we are happy to help you explore your options and take the next steps to secure your long-term goals.

How AI is changing your business

Artificial intelligence (AI) is no longer something for big tech firms alone – it is becoming a practical tool for small businesses, especially when it comes to financial management and forecasting.

We can now harness AI tools to speed up data capture, analyse financial trends, and identify opportunities for growth or savings. This is not about replacing people with machines but about making better use of real-time insights to support your decisions.

Here are just a few ways AI is being used to improve the services we offer:

• Automated bookkeeping: AI can process bank feeds, receipts, and invoices more quickly and with fewer errors.
• Cash flow forecasting: Smart systems can identify seasonal trends or highlight risks before they affect your business.
• Performance dashboards: AI-powered platforms can create dynamic reports, giving you a visual summary of profits, margins, and costs.
• Client support: AI tools can help answer common queries faster and track action points across your business operations.

As accountants, we are increasingly integrating these technologies into our advisory work, giving clients deeper insights and more proactive support. The value we offer lies not just in compliance, but in helping you understand the bigger picture.

If you are wondering how AI might benefit your business, or how we are using these tools to improve the service you receive, please do get in touch. We are here to help you get the best from both technology and human expertise.

Are you ready for Companies House ID checks?

From 2025, Companies House is rolling out new identity verification requirements for directors, people with significant control (PSCs), and anyone forming or managing a UK company. These changes form part of the Economic Crime and Corporate Transparency Act and are designed to reduce fraud and increase confidence in UK companies.

If you are involved in running a business, you may soon need to prove your identity either directly through Companies House or via a registered agent such as your accountant. Without completing verification, you will not be allowed to register a company or take up a new role as a director or PSC.

These rules apply to:

• Company directors (existing and new)
• Individuals with significant control (usually shareholders with 25% or more of shares or voting rights)
• Company formation agents
• Anyone filing information at Companies House on behalf of a business

The new system is already partially in place. Since April 2025, authorised agents can verify identities on behalf of their clients, but from a future date still to be announced, Companies House will require all key company officers to comply before filings will be accepted.

For business owners, this means a few practical actions:

• Ensure all directors and PSCs have current and valid photo ID.
• Decide whether you want to complete ID checks directly or use an authorised agent.
• Check that your company’s records at Companies House are up to date.

We expect enforcement and deadlines to follow later in the year, so it is wise to prepare in advance. If you are uncertain how these changes affect you, or how best to carry out the verification, we are happy to help.

Redress for Post Office Capture victims

In a significant update, the UK government has unveiled a new compensation scheme targeting individuals affected by the earlier “Capture” software, used in over 2,000 Post Office branches during the 1990s. This programme aims to redress those who suffered financial losses prior to the widely known Horizon IT scandal.

Background on Capture

Before Horizon, the Post Office operated the Capture system during the mid-1990s. This legacy software generated accounting records that later allegations suggest were sometimes erroneous, triggering investigations and prosecutions of postmasters, even though the data was flawed.

Scheme details and timeline

The scheme is scheduled to launch in autumn 2025. It will begin with a pilot phase involving around 150 applicants, allowing processes to be refined before a wider rollout. The focus will be on providing fair compensation for financial shortfalls suffered due to faulty Capture software between 1992 and 2000.

Context within broader Post Office compensation efforts

To date, over £1 billion has been paid to more than 7,300 postmasters who suffered losses under the Horizon system. The Horizon Shortfalls Scheme Appeals process also began in May 2025. Although these efforts have been significant, they have only addressed Horizon-era cases. Victims of the earlier Capture system have, until now, received no compensation.

Why this matters

This announcement is a key step toward justice for early victims. A previously unreleased independent report has recently resurfaced, highlighting flaws in the Capture system and renewing pressure on the Post Office and government to act. Parliament’s business and trade committee has urged the Post Office to disclose all records relating to Capture convictions and prosecutions.

Government comment

The Department for Business and Trade has stated that the scheme will be fair and accessible. It is intended to deliver swift redress, with initial payments expected in autumn 2025. This move complements the existing Horizon redress work, which has already delivered over £1 billion in compensation.

Looking ahead

Applications for the Capture scheme will open in autumn 2025, starting with a smaller pilot group before full implementation. Detailed guidance and application forms will be issued in due course. The Post Office is expected to cooperate fully by releasing all relevant documents to support claims and help correct the historical record.

BT Eyes Deeper Job Cuts as AI Reshapes Telecoms

BT has announced that it may exceed its previously stated target of cutting 40,000 jobs by 2030, as artificial intelligence (AI) becomes more central to its operations. The move comes as the company accelerates its cost-cutting programme and seeks to reorient itself in a changing telecoms landscape.

The CEO, Allison Kirkby, who took over in early 2024, has emphasised efficiency, automation, and simplification. Since then, BT has exited international operations, focused more tightly on its UK telecoms core, and made plans to separate out divisions like Openreach to unlock shareholder value.

The company is now embedding AI across key departments, including customer service, fault detection, and network operations. Automation of routine tasks is enabling BT to reduce headcount while aiming to improve efficiency and service delivery. AI-driven tools are being integrated into call centres and technical support functions, with a view to replacing human input for common troubleshooting and account management requests.

The financial rationale is clear. BT is in the midst of a £3 billion cost-reduction programme and has said that increases in employer national insurance contributions alone could cost it £100 million annually. Leveraging AI is seen as one of the few scalable methods of preserving margins while continuing to invest in infrastructure.

This restructuring has important implications across the telecoms sector. Job losses will be concentrated in customer-facing roles and back-office operations. At the same time, there is likely to be increased demand for skilled AI engineers, data analysts, and cybersecurity specialists.

Smaller providers and BT’s supply chain will need to adapt quickly. Companies offering AI systems, automation tools, and support services may find new commercial opportunities, particularly if BT’s adoption drives wider change in the sector.

The risk is that over-automation could impact customer service and employee morale. BT will need to strike a careful balance to maintain brand reputation and service levels, especially as it faces competition from a possible Vodafone–Three merger and new market entrants.

BT’s direction under Kirkby points to a leaner, more tech-led organisation. For investors, this may offer stability and long-term growth. For employees, it signals ongoing transformation and the need for reskilling. For the wider economy, it highlights how AI is moving beyond hype and directly reshaping corporate strategy and workforce planning.

Four critically important KPIs

Gross profit margin
This measures the profitability of your core operations by comparing gross profit (sales minus cost of goods sold) to total revenue. A stable or improving gross margin indicates pricing, production, or service delivery is efficient. A declining margin may signal rising costs or pricing issues.

Formula: (Gross Profit ÷ Revenue) × 100

Cash flow
Positive cash flow ensures a business can meet its obligations, pay suppliers and staff, and invest in growth. Even profitable businesses fail without adequate cash. Tracking cash flow (operating, investing, and financing activities) helps prevent liquidity crises.

Monitor: Monthly net cash inflow/outflow and rolling 3-month cash forecast

Customer acquisition cost (CAC)
This shows how much it costs to acquire a new customer. If CAC is rising without a corresponding increase in customer value or retention, it can drain profitability. Ideally, CAC should be lower than the revenue generated by each customer over their lifetime.

Formula: Total Sales and Marketing Costs ÷ Number of New Customers

Net profit margin
This is the bottom line—what remains after all costs, taxes, and interest. It reflects overall efficiency and financial viability. A strong net margin gives room for reinvestment and debt servicing, and signals long-term sustainability.

Formula: (Net Profit ÷ Revenue) × 100

How working capital is funded

Working capital refers to the day-to-day funds a business uses to manage its operations. It is the difference between current assets (such as cash, stock, and trade debtors) and current liabilities (such as trade creditors and short-term loans). Efficient working capital management is crucial for the smooth running of any business. But where does this money actually come from?

There are two main types of funding for working capital: internal and external.

Internal sources come from within the business. Profits retained after tax can be reinvested to support stock purchases, fund short-term customer credit, or settle supplier bills. Delaying payments to suppliers (without harming relationships) can also ease pressure on cash flow, as can encouraging faster customer payments. Managing stock levels carefully to avoid tying up funds in excess inventory is another way businesses internally finance working capital needs.

However, not all businesses have the luxury of strong retained profits or optimal cash flow. This is where external sources come into play.

Bank overdrafts are a common short-term solution. They offer flexible access to funds, often with interest charged only on the amount used. Overdrafts are useful for bridging short-term cash flow gaps but can become costly if used for extended periods.

Trade credit from suppliers is another widely used form of funding. By offering payment terms of 30 to 90 days, suppliers effectively finance part of a business’s working capital.

Invoice finance, including factoring and invoice discounting, allows businesses to release cash tied up in unpaid invoices. A lender advances a percentage of the invoice value upfront, improving cash flow while awaiting customer payment.

Short-term loans and revolving credit facilities are also available. These may come from banks or alternative lenders and can provide structured funding with fixed repayment schedules.

The right mix of funding depends on the nature of the business, the industry it operates in, and its financial health.

Government sells last Nat West shares

The UK government has officially concluded its involvement with NatWest Group, formerly known as the Royal Bank of Scotland (RBS), by selling its remaining shares. This move ends nearly 17 years of public ownership that began during the 2008 financial crisis.

In 2008 and 2009, the government injected £45.5 billion into RBS to stabilise the bank, which at the time was one of the largest in the world, with over 40 million customers and operations in more than 50 countries. This intervention was deemed necessary to protect the UK economy and financial system from collapse, safeguarding millions of savers, businesses, and jobs.

Economic Secretary to the Treasury, Emma Reynolds, highlighted that bringing NatWest fully back into private ownership is a significant milestone for the UK banking sector post-financial crisis. She noted that the current government halted a planned retail share sale, which could have cost taxpayers hundreds of millions, opting instead to sell shares at market value to prioritise taxpayer interests.

To date, £35 billion has been returned to the Exchequer through share sales, dividends, and fees. While this is approximately £10.5 billion less than the original support provided, the Office for Budget Responsibility has indicated that the cost of inaction would have been far greater, potentially devastating people's savings, mortgages, and livelihoods, and undermining confidence in the UK's financial system.

Top 10 skills every business owner should acquire

Running a business involves wearing many hats. Whether you are just starting out or looking to grow, developing the right skills can make all the difference. Here are ten practical skills that will help you manage your business with greater confidence and success.

1. Financial literacy
Understanding your numbers is vital. Learn how to read basic accounts, track cash flow, calculate profit margins, and understand tax obligations. This allows better decision-making and helps avoid costly surprises.

2. Time management
Managing your time well means focusing on what matters most. Learn to plan your day, delegate when needed, and avoid distractions so you can keep your business moving forward.

3. Leadership
Whether you employ staff or work with freelancers, good leadership helps you bring out the best in others. Clear direction, honest communication and the ability to motivate people all matter.

4. Problem-solving
Every business faces challenges. Building the habit of thinking through problems calmly, exploring options, and finding practical solutions will save time and reduce stress.

5. Basic marketing
You do not need to be a marketing expert, but you should understand the basics. Learn how to identify your ideal customer, promote your services, and use tools like social media or email newsletters effectively.

6. Sales skills
Being able to explain the value of your product or service, handle objections, and close deals is essential. Sales is not about pressure – it is about confidence and clarity.

7. Negotiation
Whether agreeing prices with suppliers or finalising a contract, negotiation skills can lead to better deals and long-term relationships.

8. Digital confidence
Modern businesses depend on digital tools. Learn how to use accounting software, manage online bookings or orders, and keep data safe. Embracing technology saves time and improves accuracy.

9. Strategic thinking
This means stepping back from daily tasks and thinking about where your business is going. Set goals, measure progress, and review what is working – and what is not.

10. Adaptability
Markets change, rules change, and customer needs evolve. Being open to new ideas and willing to adjust your approach is what keeps businesses alive and thriving.

Developing these skills takes time, but each one will give you more control and clarity in running your business.

Buying a business – a simple due diligence checklist

Before you agree to buy a business, it is essential to carry out due diligence. This means carefully checking the facts and risks so that you can make an informed decision. Here is a basic checklist to guide you through the process.

1. Review financial records
Ask for at least three years’ worth of accounts, including profit and loss statements, balance sheets, and tax returns. Make sure the figures are consistent and professionally prepared. Check for signs of financial difficulty, falling profits, or unusual expenses.

2. Check VAT, PAYE and tax compliance
Request confirmation that the business is up to date with VAT, PAYE, Corporation Tax and Self-Assessment filings. Ask to see HMRC correspondence and payment records to ensure there are no outstanding liabilities.

3. Look at cash flow and working capital
A profitable business may still have cash flow issues. Review recent bank statements, aged debtor and creditor reports, and understand how money flows in and out of the business.

4. Understand what is being sold
Clarify what you are buying – assets, goodwill, stock, customer lists, contracts, premises, or an entire company. Make sure the seller has legal ownership of these and that contracts can be transferred.

5. Review key contracts and agreements
Look at customer contracts, supplier terms, leases, loans, and employee contracts. Check for clauses that may affect your ability to continue trading in the same way after purchase.

6. Investigate legal matters
Ask if there are any ongoing legal disputes, unpaid claims, or employment issues. You may need a solicitor to help you with this part of the due diligence.

7. Assess staff arrangements
Find out how many staff are employed, what their roles are, and what their terms and conditions include. You may need to honour these under TUPE regulations.

8. Review systems and processes
Check whether the business has good systems for bookkeeping, payroll, compliance, and customer management. Poor systems may mean extra costs after purchase.

Final advice
Proper due diligence helps protect you from future problems and ensures you are paying a fair price.

Always work with your accountant and solicitor when buying a business.