Can you turn the supply chain crisis into a business opportunity?
7 December 2022
The ongoing supply chain crisis is slowing down production and pushing up prices. But there might be a way to turn this business challenge to your advantage. If you’re a business-to-business (B2B) supplier, this could be a golden opportunity to become a supply chain saviour.
If a competitor is struggling to supply customers, can you be the alternative that saves the day? By delivering your goods to customers more quickly, more cheaply, and with less hassle, you make your company invaluable as a local trusted supplier – and that’s great for your revenues.
Become the supplier that saves the day
Companies are crying out for reliable suppliers who can meet their needs. If you can streamline your processes, and rethink your business model, this is a gap that your company is capable of filling. It just needs a few changes in thinking and strategy.
- Reduce the impact of the pandemic on your operations – none of us were fully prepared for the impact of the COVID pandemic. But, several years into the crisis, there are plenty of preventative measures you can take to protect your staff, reduce employee absence, and offer a safe environment for employees and customers. By mitigating the negative threat of COVID, you make it easier to run your operations at full capacity.
- Focus on sustainability and providing for local customers – globalisation and ‘offshoring’ of the supply chain has increased choice and reduced costs. But a global supply chain has become increasingly difficult to manage when faced with the current geo-political challenges. By offering a local, sustainable alternative, you help your customers cut down wait times, and reduce their carbon footprint. You also give customers a way to support their local economy.
- Review your margins to offer a competitive price – businesses are paying over the odds for scarce materials and supplies. Try offering a better price, while still maintaining a reasonable profit margin, so customers see the benefits of your cheaper, local alternative. The key is to streamline your manufacturing and logistics costs, using time-saving automation and economies of scale. By lowering your cost of goods sold you keep your profit margin, and can still offer an extremely competitive price.
- Update your systems and software to go digital – digital systems can do a lot to improve the efficiency of your operations. Modern cloud-based inventory, project management, and logistics solutions help you automate the time-consuming manual tasks. This not only speeds up your pipeline, it also frees up time for your employees and management team to focus on customer-facing tasks. This resolves customer problems more quickly, provides a better customer experience and builds a trusted supplier relationship.
Taking steps to make your B2B business more attractive in the market is always a sensible move. But with the supply chain crisis set to continue well into next year, giving yourself a competitive advantage has rarely been more important for B2B companies.
We can help you review your business model and your key targets for the coming months. With the right plan behind you, there’s nothing to stop you maximising the supply chain opportunity and making your business the 'go-to supplier of choice.
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Your business structure plays an important role in how your business operates, how profits are taxed, how decisions are made, and how much personal risk you may be exposed to. For many businesses, the structure chosen at the start made sense at the time. But as your business grows or changes, it is worth asking whether that structure still supports where you are now - and where you are heading. The three most common business structures are sole trader, partnership and company. Each has different cost, administration, tax and liability considerations. Operating as a sole trader A sole trader structure is where one person owns and runs the business. The main benefit is simplicity. It is easy to set up, and from a tax perspective, business profits or losses are included in your personal tax return. Being a sole trader also does not prevent you from employing staff if your business grows. However, this structure can carry more personal risk. Sole traders generally have unlimited liability, which means if the business runs into financial or legal trouble, you may be personally liable. This makes the right insurance and risk management especially important. A sole trader structure can also become limiting if you want to bring in other owners, attract investment, or prepare the business for sale. Working within a partnership A partnership is where two or more people go into business together. Partnerships can be a practical way to combine skills, knowledge, resources and capital. They are usually relatively simple to set up and manage, although it is important to have a clear partnership agreement in place. This should document how profits are shared, how decisions are made, and what happens if one partner wants to leave or circumstances change. From a tax perspective, partnership profits are generally not taxed at the partnership level. Instead, each partner includes their share of the profits in their own personal tax return. The main risk is that partnerships do not offer the same legal separation as a company. In many cases, partners may be liable for partnership debts jointly and severally. There are ways to reduce this risk, such as using a limited partnership, but this should be considered carefully with the right professional advice. Operating as a company A company is a separate legal entity from its owners, who are known as shareholders. One of the key advantages of a company structure is limited liability. In many cases, a shareholder’s financial liability is limited to the amount they have invested in the business. A company structure can also be useful if you want to bring in investors, introduce new shareholders, or sell the business in future. However, companies usually come with higher administration and compliance requirements than a sole trader or simple partnership structure. This includes annual accounts, tax returns, Companies Office requirements and other record-keeping obligations. It is also important to remember that company funds belong to the company, not personally to the directors or shareholders. Money is usually taken out through salary, dividends, drawings or director loan accounts, depending on the circumstances. Getting this right is important from both a tax and cashflow perspective. When should you review your structure? It may be worth reviewing your business structure if: your business has grown or become more complex you have taken on staff, debt, assets or higher levels of risk you are considering bringing in another owner or investor you are planning to sell, exit or pass on the business your personal circumstances have changed you are unsure whether your current structure is still tax-effective or appropriate Is your current structure still working for you? There is no one-size-fits-all answer when it comes to business structure. The right option depends on your business, your goals, your risk profile and your future plans. If you are unsure whether your current structure is still the best fit, talk to our team. We can help you understand the pros and cons of each option and work with your legal adviser where needed to make sure your structure supports your business now and into the future.
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