How you can help your business through the National Insurance changes

The recent increases in National Insurance contributions, combined with a reduction in the threshold from £9,100 to £5,000, have already begun to have a significant impact on hospitality businesses across the UK, exacerbating already challenging financial conditions.  

Britain’s nighttime economy seems under threat, with little help coming from the Government to balance April’s Budget changes. That month alone saw the closure of 67 pubs, the highest for almost a year, with Brewdog subsequently announcing the imminent closure of 10 locations across the country.  

Rising costs, including higher wage bills from the rise in National Living Wage, as well as inflation creeping up to 3.6 per cent in June, have put immense pressure on hospitality businesses, leaving many struggling and forcing some to consider whether they will have to close their doors altogether. 

However, there are things hospitality businesses can do to help mitigate the financial pressures and ensure long-term sustainability. Here are some key tips to consider: 

1. Technology can deliver long-term savings – Reviewing and streamlining your operations via new tech can uncover significant cost-saving opportunities. Consider investing in technologies or software that automate routine tasks such as booking management, stock control and staffing schedules to reduce staff and operating costs.  

2. Marketing opportunities that don’t break the bank – New advances in AI mean that businesses who are tech savvy can produce cheap and effective marketing videos and other content that would previously have been expensive but could increase traffic through the door and help build your brand. 

3. Negotiate with suppliers – Engaging with suppliers to renegotiate prices, explore bulk-purchase discounts, or consolidating your supplier base can help provide savings. Establishing stronger, long-term relationships with fewer suppliers can also lead to better service, more flexible payment terms, and improved overall value. 

4. Conduct an insurance review – Many hospitality businesses unknowingly have gaps in their insurance cover or are overpaying for unnecessary protection. Carrying out a thorough insurance review with a trusted advisor can help identify these gaps and uncover opportunities to reduce costs without compromising essential protection. Ensuring you have appropriate and competitively priced insurance is a straightforward way to ease financial strain. 

5. Energy cost management – With energy costs at unprecedented levels, adopting simple yet effective energy-saving measures can significantly reduce your utility bills. Switch to energy-efficient lighting, invest in energy-saving kitchen equipment, or install smart meters and thermostats to optimise your energy usage. Small changes that have an upfront cost can lead to substantial financial savings over time. 

6. Pension salary exchange schemes – Over two thirds of UK SMEs are missing out on a total of around £2.7bn in employer National Insurance savings because they are not using pension salary exchange schemes. Introducing a salary exchange pension can reduce NI contributions while boosting employee benefits, providing an effective way to cut costs and support your team. 

7. Staff training and retention – High staff turnover is costly for hospitality businesses. Investing in staff training and development not only improves the quality of your service but also boosts employee retention rates, reducing recruitment and training costs. Consider offering career progression pathways, staff incentives or flexible working arrangements to foster a motivated and loyal workforce. 

8. Maximise available support and grants – Stay informed and take advantage of any available financial support or grants provided by government or industry-specific bodies. For instance, at Howden, we recently ran an SME Budget Support Competition, aimed specifically at providing financial assistance to SME-sized businesses. You can sign up to be notified when we launch our next competition, and you can learn about its impact here - Howden SME. 

While the recent economic pressures and the Budget changes have undoubtedly placed additional strain on hospitality businesses, these proactive and strategic steps can help mitigate their impact. At Howden, we are committed to supporting hospitality businesses, during what is a difficult time, through practical financial guidance and tailored insurance solutions. Ensure your business remains resilient by staying informed, adapting to changes, and seeking expert advice when needed.