Running a small business today is not easy.

Costs are rising, regulations are changing and most owners are wearing far too many hats. It is no surprise that many SMEs feel constantly on the back foot, reacting to problems rather than planning ahead.

In this episode of the 1020 Networking Podcast, Paul Hill speaks with Deborah (Debs) Weatherell from HR Dept Solent and Emma Lodge from TaxAssist Accountants Park Gate about the real challenges they see every day across local businesses.

They cover cash flow, payroll, culture, flexible working, mental health and the danger of treating HR and finance as “necessary evils” rather than strategic partners.

Cash Flow, Costs And Knowing Your Numbers

Emma starts with the obvious but often neglected issue – cash flow.

In the current climate, business owners are dealing with:

• fluctuating revenue
• rising wages and National Insurance
• higher employer pension contributions
• utilities, supplies and fuel costs soaring

There are things SMEs can do, such as:

• building an emergency fund
• tightening budgets and monitoring income and expenses
• diversifying income streams

But none of that works if the owner does not really know their numbers. That is where a proactive accountant becomes more than just “the person who does the tax return”.

Rising Payroll Costs And HR Decisions

On the HR side, Debs sees how rising employer costs are changing decisions around hiring and growth.

Employer NI, minimum wage increases and pension contributions all hit the bottom line. For micro and small businesses, an extra few hundred pounds a month per employee is significant.

The result is:

• delayed hiring
• trying to do more with fewer people
• short term, distress purchasing of staff or outsourced services

This often leads to “bargain basement” decisions – going for the cheapest support instead of the most valuable. In HR, that usually means waiting until there is a serious problem before calling for help.

Proactive vs Reactive: Business Plans And People Plans

Both Debs and Emma stress the difference between proactive and reactive behaviour.

A clear business plan and people strategy forces owners to think about:

• where the business is going
• what roles are needed and when
• how staff are used and supported
• what efficiencies can be made elsewhere

Debs points out that payroll is often the biggest overhead. If you are spending heavily on people, it makes no sense to drift without clear direction or culture. A simple people strategy, reviewed each year, can keep everyone pulling in the same direction.

Emma adds that planning is not just for big companies. Even very small firms benefit from:

• clear targets
• regular review of numbers
• simple cost analysis on staffing, rotas and utilities

Without that, the business can quickly become “rudderless”.

Ostrich Syndrome: Why SMEs Avoid HR And Finance Support

Paul asks the blunt question: why do so many owners avoid speaking to people like Debs and Emma until something has gone badly wrong

Debs calls it ostrich syndrome.

Owners bury their heads in the sand, telling themselves “it will not happen to me”. They only reach out when there is a claim, a conflict, a complicated dismissal or a large tax or payroll issue. By then, fixing it is far more expensive than preventing it.

Both Debs and Emma agree that having a trusted advisor on HR and finance – someone you speak to regularly – is crucial to running a resilient SME.

Accountants And HR As Part Of Your Extended Board

Emma explains that a modern accountant does much more than file returns.

Because they see bank accounts and payroll in detail, they can:

• highlight where costs can be reduced
• analyse rotas and staffing levels
• spot “dead labour hours”
• help with planning and scenario modelling

Her practice uses fixed fees spread over the year so clients are not afraid to pick up the phone.

Debs sees HR and accountancy as part of an SME’s extended board. Before taking on a full-time member of staff, she checks her own numbers with her accountant. Many SMEs forget that they can and should do the same.

New Regulatory Pressure: Fair Work Agency And Making Tax Digital

Looking ahead, both HR and finance are facing further regulation.

Debs highlights the proposed Fair Work Agency which is likely to act like “HMRC for HR”, with powers to audit businesses, investigate poor practice and even backdate penalties to incorporation.

Emma mentions Making Tax Digital, which will require more regular reporting but also creates more opportunities for guidance and course correction throughout the year.

The message is clear: the direction of travel is more scrutiny, not less. SMEs that put their house in order now will be far better placed than those who wait.

Mental Health, Loneliness And Culture

Both guests acknowledge the human side of all this.

• Running a business is lonely
• Owners carry a lot of pressure
• Economic strain affects mental health

Debs often takes discreet calls from MDs and CEOs who simply need a safe, professional sounding board. Emma enjoys the relational side of her work too, supporting people through overwhelm and difficult decisions.

They also stress the importance of culture:

• investing in people
• leading fairly and consistently
• making sure everyone, from CEO to junior staff, lives the same values

As Debs puts it, “people do not leave companies, they leave their bosses”.

Flexible Working, Policy And The Cost Of Getting It Wrong

Finally, Debs touches on flexible and hybrid working. Employees now have the right to request flexible working from day one, and employers must respond within set rules and limited fair reasons to refuse.

Old school attitudes like “I just want them in the office” will not stand up at tribunal.

Debs shares a case where an employer failed to put a proper remote working policy in place. When an underperforming employee challenged them, they won around £17,000 plus a 25% uplift because the company had not followed its own obligations.

A missing policy became a five-figure problem.

The Takeaway For SMEs

The theme of the episode is simple.

SMEs cannot afford to treat HR and finance as an afterthought.

• Plan early
• Know your numbers
• Invest in your people
• Use your accountant and HR consultant as part of your extended board
• Get your house in order before regulators or tribunals do it for you

You do not have to do it all alone.

Working with the right partners makes business ownership less stressful, less risky and far more sustainable.

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