April is coming - no time for fooling around

After many months of uncertainty and nervousness, the moment is almost upon us. The rise in employer National Insurance first announced in the Budget last Autumn is set to take effect in April.
New research from SME lender iwoca suggests that the impact on the UK business landscape and 'working peoples' lives is going to be huge.
It found that over 300,000 SMEs may cut jobs due to those rising employer National Insurance contributions (NICs). In addition, 59% expect to raise prices for customers to cope with the increase.
Employees who remain on the payroll of small and medium-sized businesses are also expected to feel this pinch. Over a third (35%) of SMEs say they will slow hiring plans as a result of an increased NICs burden, 31% expect to have to reduce pay rises, and over a quarter (27%) will have to delay promotions.
Small and medium-sized firms are anticipating blows to balance sheets with the hike in NICs. Two-thirds (66%) of SME leaders estimate the higher NICs rate will cost them each over £10,000. These costs are expected to be passed onto customers — a majority (59%) of SME owners expect to increase prices.
While the Government has increased the employment allowance to help offset the higher NICs rate, over a quarter (28%) of SMEs say the measure will not provide sufficient relief. This exceeds the 21% who believe the allowance will significantly offset the additional costs.

The news comes, iwoca said, as the tax burden on UK businesses continues to mount. Seven in 10 (69%) SME owners say that the rate of taxation on their business is high — fewer than 3% think taxes are low.
Without the NICs increase, a third (33%) of SME leaders say they would invest more in their businesses or lower prices - stimulating growth instead of stalling it.
Seema Desai, iwoca’s Chief Operating Officer, said: “Based on our survey, rising employer NICs are likely to result in slower wage growth and job losses among SMEs. While the increase in employment allowance provides some relief, higher costs overall could limit SMEs’ ability to invest and grow - and that’s something we need them to do to help boost economic growth in the UK.”

This then is the reality - or soon to be the reality - for SME businesses in the UK. Owners need to ensure they make the above changes as carefully and as sensitively as possible.
If job cuts are going to be made then perhaps they could look at other options than packing off large numbers in one go with redundancy letters in their back pockets.
Natural attrition could be an answer. Owners can get an understanding of when and where employees might be looking to leave the business either due to retirement or a career move away. They can then choose not to hire and replace these workers or even incentivise early retirement to slim the workforce down.
Part-time working and job sharing can be other options.
Whichever one is taken then owners need to communicate the changes well with staff and ensure they have a right to reply and debate.

When it comes to price rises then again planning and analysis is vital. Do your research to see how price rises will land with clients and customers. How will they react? Will they look at alternatives? What are your competitors doing?

Ideally, much of this will already be in the planning given the period since the Budget last year. But then again these are busy times and particularly volatile. It is hard to plan and to be calm. It is too easy to make rash and quick decisions which could put an organisation in danger.

When April comes think rationally and think fairly.