If 2020 was a low point for many small businesses, 2021 wasn’t quite the bounce back year some predicted. Despite the hope bought on by the vaccination rollout and the heavily trailed ‘Freedom Day’, new Covid variants emerged and spread through the population – first Beta, then Delta and now Omicron – prolonging the pandemic into its second and third year. We end 2021 with the country moving into tighter restrictions and Covid cases soaring.
Feels like we’ve been here before, doesn’t it?
Despite all this, there have been undoubted positives. 8.47 billion vaccinations administered globally. Progress made on climate action. The return of live events. England making it to a major tournament final… and predictably losing on penalties. (Depending on your nationality, that last bit might well be a positive!)
So now it’s our duty as a thought leader and bastion of business wisdom, to make some foolhardy predictions for the year ahead. What can we expect to see in 2022?
1. A nervy start
We don’t want to focus too much on Covid, but clearly the rapid spread of Omicron will have ramifications for businesses into the new year.
The current government focus is to build a wall of defence through vaccinations – including the mass booster rollout for all adults. We will see over the coming weeks and months how this new variant plays out in the face of these measures.
Whilst Omicron is undoubtedly more transmissible, data is emerging every day which will point to whether further restrictive measures are needed. The hope is that the variant that first emerged in South Africa results in milder symptoms and, with protection from the booster rollout, society can carry on in a similar vein to the second half of 2021.
Should this not be the case, expect further debates on mandatory vaccinations and passports – something that will concern those in the hospitality and events industry. And, of course, any new restrictions will likely mean a new raft of support measures from the Chancellor.
In positive news for businesses struggling to meet the self assessment deadline on 31 January 2022, HMRC have announced that they will not charge
- late filing penalties for those who file online by 28 February 2022
- late payment penalties for those who pay the tax due in full or set up a payment plan by 1 April 2022.
2. What next for Boris?
Talking of the Chancellor, could Rishi Sunak be Prime Minister when we’re writing our predictions for 2023? That might not be as fanciful a suggestion as it sounds.
The beleaguered PM has suffered blow after blow in the fall of 2021 – culminating in the humiliating North Shropshire by-election defeat. With many Tory MPs losing faith in Boris, it’s certainly not outside the realm of possibilities that there will be a leadership challenge sometime soon.
We shan’t dwell on this one too much, but should we have a new Prime Minister it’s fair to say it will be a different flavour of leadership to Boris. How that would play out for businesses is impossible to say – but a change of leader usually means a new vision and flagship policies.
As ever with external factors, make sure your business planning gives some consideration to the wider issues at play. Whether the PM is Boris or Rishi or Kier might not be your foremost concern, but a change to Corporation Tax or the VAT registration threshold, for example, could have major ramifications.
3. Virtual fatigue
Enough politics. Back in November, Informi attended the Business Show at the Excel in London. It was our first face-to-face event since the pandemic, and it was pleasantly surprising to see a strong turnout.
Maybe we shouldn’t have been surprised. Talking with other delegates and exhibitors really bought home the value of in-person networking – something we’ve missed in the last 18 months. Many delegates expressed feelings of ‘virtual fatigue’ and a joy to be back out there forging human connections.
This notion of ‘virtual fatigue’ is backed up by a recent McKinsey survey, which found 56% of people were trying to reduce their screen time.
“We experienced the equivalent of five years of digital growth in eight weeks of time. In that sense, we jumped from 2020 to 2025” says Neira Hajro, a McKinsey partner who led the research. “This was amazing. But based on our survey results, consumers say they think that they will slip back to their pre-pandemic habits, doing less online.”
It also bears out when it comes to attitudes towards work in the future. According to the ONS, 85% of adults homeworking during April to May 2021 wanted to use a hybrid approach to work in the future.
Whilst no one is suggesting we abandon technology and flock back to the 9-5 (and the dreaded commute), evidence suggests people are keen to find a balance.
4. Smarter meetings
The other side of this, is to say that the virtual world isn’t going anywhere fast. In 2021, Facebook launched the ‘Metaverse’ which prompted ridicule in some quarters. It’s central premise, however, is the need to create better virtual spaces – and that will continue to be an important theme in 2022.
There’s no doubt we’ve all come a long way since March 2020 when even connecting to a video call was a daunting thing – let alone the skill of communicating via a camera.
Yet, even with these skills honed over time, virtual meet ups can fall into the trap of being stale and predictable. As we enter the third year of homeworking, businesses should be thinking of ways and even new applications that will help virtual meetings to be more engaging and productive.
How can you do this?
- Utilising the strength of virtual and recognising its inherent weaknesses. For example, video meetings are often better suited to sharing information on a screen than in-person. On the other hand, is a video meeting with 20 people the best place to bounce around ideas?
- Preparing in advance. This goes for any meeting or presentation. Have a clear idea about the structure and outputs you want, ideally encouraging people to give it some thought ahead of the session.
- Using interactive apps and tools. As a starter for 10, try using breakout rooms in Zoom or Teams, free quiz tools like Mintimeter, or brainstorm creative ideas using a digital whiteboard such as Miro.
You could stick sustainability on pretty much any predictions list for the last decade. Every year the pressure on businesses to be more sustainable is dialled up a notch.
But that’s especially true off the back of the COP 26 summit in Glasgow. As KPMG notes in their Implications for business piece, “COP26 has been termed the ‘Business and Finance COP’, because of the more prominent role the business and finance community has taken compared to previous conferences.”
It concludes: “If you already have a credible, quantified plan for emissions reductions, then great; if you don’t, you should begin to consider one as soon as possible.”
This shouldn’t be seen as burden either. It’s easy to make the case that those businesses who are championing sustainability and pursuing environmentally-friendly practices will prosper financially.
The outgoing Governor of the Bank of England, Mark Carney reflected that “Firms that align their business models to the transition to a net-zero world will be rewarded handsomely. Those that fail to adapt will cease to exist. The longer that meaningful adjustment is delayed, the greater the disruption will be.”
We’ve written some net zero tips to help your business do your bit. And if you’re already performing well on sustainability, think about letting your customers know you take it seriously with messaging on your website and marketing materials.
6. More Brexit disruption?
The perfect storm of Covid and Brexit led to supply chain issues in 2021, the first year of the UK leaving the Customs Union. Empty supermarket shelves and fuel pumps were blamed on HGV driver shortages, and businesses reliant on EU-UK trade complained of additional paperwork and costs.
Some are concerned this will get even worse with the full customs controls being enforced from 1 January 2022. The new controls mean companies that import goods will have to make customs declarations to HMRC and pay tariffs immediately, where previously there was a six month grace period.
7. Data scrutiny
Moving on to marketing, when was the last time you evaluated the quality of your data? The pandemic has bought about seismic change for people and businesses across the world. People you consider your target audience may have changed job roles, careers, moved home, downsized, upsized, started families, bought pets, etc. Businesses you once sold to may no longer exist, changed location, or pivoted to a different area of focus. This brings about many questions:
- Does your data reflect the world in 2022?
- Are the key decision makers the same as before?
- Are your customer profiles up to date?
- Do you have relevant market data?
- Are there new markets that have opened up?
Whilst the last two years have seen businesses focus on survival, there may be more of an opportunity in 2022 to be proactive and review the integrity of your data by asking these questions. The closer your data reflects the reality the better chance you’ll have of delivering results for your customers and your business.
8. Costs to increase
Unfortunately, the current economic picture isn’t the prettiest for consumers and businesses. There are a raft of fiscal measures being introduced by the Chancellor in 2022 to try and balance the books following the economic damage caused by the pandemic. This comes at a time when inflation is currently at 5.1% and expected to increase. For businesses, we’ve picked out the following major changes to watch out for:
- National Living Wage for over 23s goes up from £8.91 to £9.50
- The dividend tax rates for 2022/23 will increase:
- Basic rate taxpayers rise from 7.5% to 8.75%.
- Higher rate taxpayers rise from 32.5% to 33.75%.
- Additional rate taxpayers rise from 38.1% to 39.35%.
- National Insurance rates are increasing from 12% to 13.25% on earnings between £9,568 per year and £50,270 per year.
- Interest rates have increased from 0.1% to 0.25% with rates expected to increase further in 2022
- Income Tax thresholds to remain the same
As ever, when it comes to managing your business finances you’ll find plenty of helpful resources via Informi. Here’s a recent webinar we ran on cash flow forecasting:
If you’re looking to boost your finance skills in 2022, you should also check out AAT’s Business Finance Basics e-learning courses – six interactive modules covering the basics of bookkeeping, budgeting, cash flow and financial statements.