In the latest Financial Matters column Fairhurst Accountants gives expert advice on planning

As a chartered accountancy practice we’ve seen businesses thrive, and also seen them struggle. One key difference between those that weather storms and those that flounder is simple: planning.

It’s great to be optimistic. No one starts a business expecting it to fail. But while optimism fuels ambition, realism ensures survival.

Why It Matters

Running a business is unpredictable. Market downturns, late payments, supply chain issues, and unexpected tax bills can all catch you off guard. Hoping for the best isn’t a strategy - preparing for challenges is.

A lack of financial foresight is one of the biggest reasons businesses struggle. Many companies operate on tight margins, assuming that consistent sales or steady client payments will keep them afloat. But what happens when a key client pays late, or worse, stops trading? What if an economic downturn slashes demand for your services? These scenarios are not just possibilities - they are realities that many businesses face.

How to Plan for the Worst

Build a Cash Buffer – A rainy-day fund can cover unexpected costs and give you breathing space when cash flow is tight. Aim for at least three to six months’ worth of expenses.

Monitor Cash Flow – Stay on top of your numbers. Regularly review income, outgoings, and potential risks. Spotting problems early allows you to take corrective action before they become crises.

Budget for Tax – Don’t get caught out by an unexpected tax bill. Set aside money for VAT, Corporation Tax, and PAYE liabilities so there are no nasty surprises.

Review Contracts and Insurance – Ensure you have strong contracts with clients and suppliers, and adequate insurance for potential risks, including business interruption cover.

Plan for Economic Downturns – Have contingency plans in place. If sales drop, what expenses can you cut? What alternative revenue streams can you explore?

The Bottom Line

Hoping for success is natural. But a solid financial plan ensures you can manage setbacks without panic. The best businesses aren’t just built on big dreams - they’re supported by smart planning.

If you need help stress-testing your business finances, contact your accountant. They can help you make sure you are prepared for anything.