Strengthen your team and your business: HR tips for tough times

The latest budget has left many small business owners scratching their heads. With rising employer costs and tighter margins, it’s easy to feel overwhelmed. But tough times also offer opportunities to rethink, streamline and strengthen your business. With the right approach, you can navigate these changes and emerge more resilient.

Let’s dive into the key challenges and explore practical, detailed strategies to set your business up for success.

What’s Changing?

National Insurance Contributions (NIC)

From April 2025, employers’ NIC is increasing to 15%, and the threshold at which you start paying is dropping to ￡5,000. For most businesses, this means significantly higher costs per employee.

National Minimum Wage (NMW)

The minimum wage is set to rise again in 2025. Over 21s will be on ￡12.21 an hour, whilst younger employees will earn ￡10. While this is great news for workers, it’s another expense for employers to factor into their budgets.

Employment Allowance

There’s a silver lining for smaller employers: the Employment Allowance is doubling to ￡10,500. If you’ve got a small team, this will offset some of the increased costs but for many, it won’t cover the full gap.

What Can You Do?

Now’s the time to be proactive. These changes might be unavoidable, but there are practical steps you can take to protect your business and plan for the future:

Review your costs

Take a fine-tooth comb to your expenses and cash flow. Where can you cut back? Are there any inefficiencies you can tackle? Tightening up your finances now will give you breathing room when the changes hit. This is more than just “cutting back”, it’s about making your business leaner and more efficient.

Audit your expenses: Look at every outgoing. Are you paying for services or software you no longer use? Are there cheaper suppliers who can offer the same quality?

Think long-term: It might be worth investing in cost saving measures like better equipment or automating repetitive tasks. A one-time expense now could save you thousands in the future.

Reassess your workforce needs

With costs of employing people rising, take a step back and look at your staffing structure. Small adjustments now can make a big difference.

Evaluate team roles: Are there overlapping responsibilities that could be streamlined? Consider combining roles or redistributing tasks to make the most of each team member’s strengths. This is one of the first things I do with my Foundations of Success? clients.

Flexible options: Part time, remote, or freelance arrangements can be a win-win. They often save money and provide flexibility for both employer and employee.

Invest in Tech: Automation isn’t just for big corporations. Affordable tools can streamline admin tasks, payroll or even customer service, freeing up your team to focus on higher-value work.

Maximise Tax Reliefs and Financial Incentives

Make sure you’re taking full advantage of the Employment Allowance and explore other tax reliefs that might apply to your business. Speak to a tax advisor to uncover hidden opportunities that could save you money.

Use the Employment Allowance: If you’re eligible, this can significantly offset NIC costs.

Explore grants and subsidies: Check if your industry has specific grants available, particularly for innovation, training or sustainability.

Work with a tax advisor: They can help you navigate the complex tax landscape and uncover lesser known reliefs that could save you money.

Focus on productivity and upskilling

Your team is your greatest asset, so make sure they’re equipped to do their best work. Focus on training and upskilling your team. A more capable workforce can achieve more in less time, boosting productivity and reducing the need for extra hires. Plus, it’s a great way to keep morale high during challenging times.

Invest in training: Upskilling your staff can improve efficiency, reduce errors, and even boost morale. Think about courses that teach digital skills, management techniques or even wellness strategies.

Leverage technology: Look for tools that help your team work smarter, not harder. Project management software, time-tracking tools or even communication platforms can make a huge difference.

Reward high performers: When budgets are tight, non-monetary rewards like recognition, development opportunities or flexible hours can keep motivation high.

Be transparent with your team

Your team will notice the pressure your business is under, so be upfront with them. Explain any changes you’re making and involve them in discussions where possible. Transparency goes a long way in building trust and loyalty.

Explain the changes: Let your employees know how the budget impacts the business and what steps you’re taking to manage it. This builds trust and shows you’re not making decisions lightly.

Involve them in problem solving: Your team might have creative ideas for saving money or increasing efficiency. Involving them can also foster a sense of ownership and teamwork.

Reassure them: Change can feel unsettling. Be clear about your vision for the future and how their roles fit into it.

Revisit your pricing strategy

If costs are climbing too high, you may need to look at raising prices. Approach this with caution, ensuring you stay competitive in your market. Communicating the reasons behind any increase to your customers can help maintain goodwill.

Analyse your market: Look at what your competitors are charging and ensure your pricing stays competitive.

Communicate with customers: If you do raise prices, be upfront about why. Many customers will understand the need if you explain how the budget changes are impacting your business.

Add value: Small extras can justify a price increase. For example, better packaging, free resources, or a loyalty programme can make customers feel like they’re getting more for their money.

Final thoughts

This budget is a tough pill to swallow but with a clear strategy, some creative thinking and a focus on efficiency, your business can adapt and thrive. Prioritising your people - keeping them engaged, supported and aligned with your goals will also be key to weathering the storm and emerging stronger.

It’s all about being proactive, staying informed and keeping your long term goals in mind. Challenges like these are opportunities to build a stronger, more resilient business for the future.

If you’d like help navigating these changes, whether it’s with strategy, HR, or managing your people effectively, feel free to reach out - I’m here to support you.

Fancy more reading? Check out some of my other blogs here:

Labour’s Employment Law Changes: What You Need to Know and How to Prepare

Adapting to Employment Law Changes Under the New Labour Government

Understanding the Latest Sexual Harassment Legislation 2024

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Natalie | Founder and Director, Dynamic HR Services Ltd.

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