You can't have failed to be personally moved and dismayed by the sheer scale of the ecological disaster created by the recent BP oil spill off the coast of the USA. With the spill covering an area the size of Scotland, the crisis had a devastating impact upon local businesses and an even greater impact upon wildlife.
Here in the UK, being on the other side of the Atlantic it can be easy to feel disconnected from the oil spill crisis and, whilst feeling sympathy for those affected, feel that it has no real relevance or impact upon our own economy - and our own businesses. However - is that really so? Online accounting software providers Fusion take a look at what the BP disaster could mean for you and for small businesses - and how you should consider the potential impact before dismissing it as a 'US issue'.
BP - a company in crisis?
BP - a company in crisis?
BP employs over ten thousand people in the UK, which is no small potatoes. The various taxes paid into UK government by BP - including employee National Insurance payments, income tax and fuel excise duty paid by customers - currently stands at around £5.8 billion pounds per year. That's a huge hole in the UK economy should BP's presence in the UK be compromised by the costs associated to the oil spill.
Share Prices fall - and pensions could be at risk
As a direct consequence of the oil spill, BP's share value has been decimated - nearly halving in value with a cool £125 billion being wiped off its stock market value. That's not only bad news for UK shareholders, but also pensions. That's because UK pension funds are major BP shareholders - with £1 of every £7 paid in dividends to UK pension funds by FTSE100 companies comes from BP. It's estimated that around 18 million people in the UK either own BP shares, or pay into pension funds which are BP shareholders.
Simply put - if BP sneezes, the UK economy is likely to catch the cold.
Simply put - if BP sneezes, the UK economy is likely to catch the cold.
What does it mean for small businesses?
If eighteen million people in the UK are directly affected by the BP stock market crash, you can bet that a significant proportion of those are going to be your customers. In addition, should the revenue generated for the government by BP operations in the UK fall significantly, that is likely to affect the entire country in one form or another - via increased taxes, public service cuts or other ways or rebalancing the books. On the heels of a tough Budget, it's prudent for every business to take stock of its current operations and tighten its belt - just in case.
What can I do to protect myself and my business?
First things first - if you're concerned about your pension fund, speak to your pensions or financial advisor straight away for professional advice. Give your business a health check to make sure you're in the best shape you can be to weather any trying times ahead. Speak to your accountant and book a financial review, and get your book-keeper or accounts staff to make sure you're on top of your cashflow. Make sure your debtors days are being controlled, your overheads are under control and that you're making the most of your online accounting software to provide you with up-to-the-minute management reports.
Accounting Software by online accounting provider Fusion Accounts, small business accounting software.
