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In collaboration with Bokio

Once you have started your own business, there is a lot to think about, ranging from how your business idea should generate profits in the best way and how you should find new customers for your business. Learning about taxes may not be what you look forward to most when you start your own business — but it's an essential ingredient to success. Learn everything you need to know about taxes as an entrepreneur with the help of this guide.

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How much tax do you pay?

There is no simple answer to this question. The amount of tax you pay depends on many different factors, including how much income you have, your age, where you live, what form of business you run, what deductions you are entitled to, and more. If you earn less than $22,300 in one income year, you pay no tax at all and if you earn more than $613,900 in one year, you pay roughly 50 percent tax. After reading this article, you will hopefully have a better understanding of how different taxes affect your income.

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Different types of income affect the tax you pay

When you talk about taxes, it is good to first be familiar with what the different types of income mean. There are three different types of income that determine which taxes you will pay, differentiating the income law can make it easier to understand the big picture surrounding your tax situation. Within each type of income, there are many different taxes that are added, so you can see the income categories as overall categories.

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Income type Business activity

The income category of business activities is a relatively broad tax class that includes all types of business activities, such as sole proprietorships, trading companies, limited partnerships and limited liability companies. Thus, the income category business includes companies and not individuals (although the limit is fluid for, for example, an individual company).

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Income type service

Income from service includes money earned through an employment or assignment. If you run a limited company, you pay tax in the income category of business activities on behalf of your limited liability company and tax for the income class service for your salary as an individual.

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Income type capital

The income class capital includes income and expenses incurred in connection with the transfer or sale of capital. This can be, for example, interest costs or rental of real estate. For shareholders, a common contact with the income beat is capital when they withdraw dividends from their limited liability company and pay corporation tax.

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Taxes in individual firms

When you run an individual business, it is you who make sure that the tax is paid, unlike if you are an employee and the tax is automatically deducted from your salary. The first tax you need to familiarize yourself with as an individual trader is F-tax (business tax). If you have an employment alongside your individual firm, you pay F-tax with conditions, known as FA tax.

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Own contributions in an individual company

Part of the tax that you pay in your individual firm corresponds to the social security contributions that employers pay to their employees. In an individual firm, these are called self-contributions and consist, among other things, of health insurance contribution, parental allowance, old-age pension contribution and more. Since you pay self-contributions, you are entitled to sickness benefit when you are sick, parental allowance when you have children and more, even when you are self-employed.

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Own withdrawal individual company

When you run an individual company, you do not have a salary in the same way as when you are employed or run a limited company. All your surplus in the company, that is, the amount that remains after expenses have been deducted from income, is counted as income in the taxable sense and can therefore be equated to salary.

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Once you have paid preliminary tax on your excess, the rest of the money is free to be transferred to your private account. When you withdraw money from your individual firm in this way, it is called own withdrawal. When you make your own withdrawal, your withdrawals are not taxed per se, but the money is already taxed as the firm's earnings.

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When you make your own withdrawal, it is an expense that should be recorded, but no expense that affects the firm's bottom line. For example, if you have a surplus of SEK 50,000 and choose to withdraw the entire amount as your own withdrawal, the result report will still show a profit of SEK 50,000. The only thing that happens is that your private account gets more money while the corporate account gets less money and your cash balances decrease.

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Taxes in Limited Liability Companies

Many people tend to advocate limited companies as a form of business when the idea is for the company to grow, thanks to the favorable tax opportunities. Below we review the most common taxes for limited liability companies.

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F-tax

Limited liability companies pay F-tax in the form of preliminary tax charged. Based on the preliminary income tax return or last year's earnings, you pay in f-tax each month. When you receive your final tax return, you will either pay the tax arrears to the Swedish Tax Agency or you will receive a tax refund.

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Employer's fee

Before a salary ends up in the wallet of an employee, a significant amount has already been taxed from the company's payroll payment. Employer's contribution is a tax that ensures that the employee receives a salary in the event of illness, parental leave or when he retires. In total, employer contributions in 2022 amount to 31.42 percent of gross wages.

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Corporate tax

Corporate tax is a tax paid on the profit made by a limited company in a financial year, so in the case of a loss year, no corporation tax is payable. The corporation tax for 2023 stands at 20.6 percent and is paid in the form of preliminary tax each month.

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At the end of the year, the tax paid will be reconciled against the final tax. Corporate tax also covers capital gains in limited liability companies, such as dividends. Corporate tax is thus part of the first tax stage for limited liability companies. When you receive a salary as an employee of your own limited liability company, you are also taxed as an individual in a second tier.

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State income tax

For high-income earners earning above a certain amount, the state income tax is added. That means you need to pay an additional 20 per cent tax on that sum in excess of the cut-off point.

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There are various limits to keep an eye on when you are near the limit of being subject to state income tax; the layer limit and the cut-off points. For 2023, the tax limit is SEK 598,500, that is, if your taxable earned income, after deducting the basic deduction, exceeds SEK 598,500, you are subject to the state income tax.

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Because it can be difficult to know exactly how big the basic deduction is, you can instead start from the highest income you can earn before the basic deduction is deducted. This is what you call the cut-off point for state income tax, and there are two different cut-off points depending on whether you are over or under 66 years of age.

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For persons younger than 66 years, the cut-off point for state income tax is SEK 613,900.

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For persons who are 66 years of age or older at the beginning of the year, the cut-off point for state income tax is SEK 683,200.

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The difference is due to the fact that the basic deduction is higher for retirees.

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Preliminary tax

The F-tax is usually paid monthly in the form of a pre-tax charge. How much you pay is based on how much tax you paid last year or the amount that you listed on your preliminary income tax return. At the end of the financial year, your paid tax will be reconciled against your final tax.

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When do you get a tax refund?

If you have paid more provisional tax than you should, you will be reimbursed by the Swedish Tax Agency. There are many people wondering when you get money back from the tax, and the answer varies depending on when you filed your income tax return.

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If you filed your tax return before March 30, you will receive a refund on the tax April 5—7.

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If you filed your tax return after March 30, you'll receive a tax refund between June 8-9.

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Basic deduction

Basic deduction is a deduction made to lower your taxable income and thus reduce tax. If you run a sole proprietorship, the basic deduction is deducted from your income from business activities, and if you run a limited company, the basic deduction is deducted from your salary. You do not need to apply or register for the basic deduction — this will be deducted automatically.

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The purpose of the basic deduction is to reduce the tax rate for the income earner and to equalize the tax between different income groups. The basic deduction is higher for low- and middle-income earners and lower for high-income earners. For people earning less than 22,300 in the 2023 income year, the full amount falls away under the basic deduction -- meaning you don't have to pay any taxes at all. For an accurate list of the basic deductions of different income ranges: visit Swedish Tax Agency's website.

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Job Tax Deduction

The job tax deduction is another deduction that reduces your tax base. Like the basic deduction, the employment tax deduction is not something that you need to apply for, but it is deducted automatically by the Swedish Tax Agency.

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In order to qualify for the employment tax deduction, you need to receive your income through work or business activities, if the income comes from sickness benefit, parental allowance, income tax or the like, you are not eligible for the employment tax deduction.

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The job tax deduction may only be deducted from the council tax, the deduction does not apply to the state income tax, the property tax or the real estate levy. How big the job tax deduction is depends on how high your income is.

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Municipal tax

Municipal tax is a tax that goes to your municipality and county council registered as a citizen. Municipal tax is the largest tax paid by income earners, amounting to just over 32 per cent on average in Sweden in 2022. There are variations around the country with a minimum listing of just under 29 per cent and the municipality with the highest council tax having just over 35 per cent.

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Moms

VAT is a value-added tax found on the majority of goods and services bought and sold. There are three different VAT rates: 25%, 12% and 6%, the first of which is the most common. For you as an entrepreneur, it is important to keep track of VAT, as you add the VAT rate to your price. For example, if you want to invoice 1000 SEK for a work, you need to add 25 percent to the invoice to get the right amount.

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VAT is not a tax that affects a company's bottom line because you will always break even in the end. If your outgoing VAT costs are greater than your input VAT income during a VAT period, you will receive a refund from the Swedish Tax Agency, and if your input VAT is greater than your outgoing VAT, you will need to pay the difference to the Swedish Tax Agency.

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Marginal tax

The name “marginal tax” is somewhat misleading as it is not a tax that you pay. Marginal tax is a term for the total tax you pay in the event of an increase in income. It is usually said that marginal tax is the tax that you pay on your last earned crown.

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For example, if your salary increases by 1000 SEK and 700 SEK lands in your payroll account, the marginal tax is 30 percent. Typically, marginal tax tends to be about as high as council tax, but as you approach the limit of state income tax, marginal tax increases significantly.

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If your salary exceeds the cut-off point for state income tax of 20 percent, the marginal tax usually lands up toward 50 percent. If your salary increase of SEK 1000 means that you receive SEK 500 more in your salary account, the marginal tax is 50 percent.

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Benefit taxation

Sometimes employers provide compensation to their employees in addition to salary, if such compensation costs a private cost of living it is called a benefit. One of the most common types of benefits is company car. Like cash compensation, benefits also need to be taxed, both by employers and workers. Employers pay employer contributions for the benefit and the employee pays taxes.

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As a rule, all benefits are taxable, but there are exceptional cases that are regulated to be tax-free, such as health care allowance.

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Excise

In addition to all the taxes already mentioned, there are specific taxes on specific goods and services, known as excise taxes. Excise taxes are an effective way for the state to regulate consumption in a desirable direction and, in addition, provide increased tax revenues. The tobacco tax, the alcohol tax and the tax on plastic carrier bags are all examples where you want to influence consumption through a higher price.

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Bokio makes tax easy

In Bokio's accounting software, you hardly have to think about the tax. When paying wages, the tax is calculated automatically and the correct amount is deducted. After that, an employer declaration is generated, which you can easily submit to the Swedish Tax Agency.

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In cooperation with Bokio, you as a Froda customer receive a 20% discount on Bokio Premium. ‍

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Go to the offer.

As an entrepreneur, it is easy to spend all hours of the day making their services and products as good as possible for the customer. It's easy to forget that it doesn't matter if your target audience doesn't know you exist. The following article lists marketing strategies that increase your exposure while adding value to your business.

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Most people with business experience know that marketing is vital to winning customers. Thanks to the internet, there are currently several ways to market yourself that are both cheap and effective. In this article, we will advise you about

1. Social Media Marketing
2. Collaborations with other companies
3. How to Increase Your Company's Publicity

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Social Media Marketing

As an entrepreneur, you can use multiple social channels to reach out to your customer base. You can start a blog, an Instagram account or choose to post a free company page on Facebook, where you can share everything from other people's posts to your own photos and videos. You can also pay to advertise on social media and you choose which audience you want to reach and how much money you want to spend on your advertising. This is a great way to reach out to the public because most people use some type of social media on a daily basis.

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It is easier to build a relationship with your customers through social media, as you can maintain a more personal tone than on your website, for example. In addition, through this type of media, you can reach many people very quickly, as your posts can be seen directly by your network and then in turn can be spread to their network in just a few minutes via likes and shares. Make sure to create posts that others want to spread — encourage this through contests and discounts. Another advantage of social channels is that they are relatively inexpensive to use, even when advertising.

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Collaborate with other companies

Modern marketing is very much about building relationships — not just with your customers. It is very effective to collaborate with other companies. For example, you can use influencers who promote you through their channels, or work with companies with the same audience as you to reach out to each other's customer bases. It will increase your exposure and need not cost you anything.

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Another way to collaborate with companies is to hold events together — the cost will be lower when you are more numerous. For example, if you have a plumbing company, you can contact construction companies and collaborate to carry out general contracting with customers.

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Marketing doesn't have to cost the shirt and doing a good job increases the value of your products and services. Ultimately, this will lead to an improved customer experience for your current customers and may result in them recommending you to their loved ones.

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Increase your publicity

Publicity is important — everyone loves exciting news. Does your company have something new to present that a journalist would like to write about? You can also comment on blogs and debate on a topic related to your business and thus draw attention to your business. The most important thing for a company is to be visible, and preferably to be visible through positive publicity. Always think through what your purpose is with your publicity, who you want to turn to, and what you want to stir up emotions.

Key dates in 2024 to watch for are here:

• March 3: Last day to acquire digital mailbox to receive the declaration digitally.
• March 4-8: The declaration is sent out digitally
• March 15 - April 15: The declaration is sent out by post for those who do not have a digital mailbox.
• March 19: Declaration opens.
• May 2: Last day to declare.
• May 13: Last day to submit the VAT return for those who report VAT once a year.
• November 14: Any remaining tax must be paid, unless there is a different date on your final tax return.

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Individual firm

As individual traders declare to the company at the same time as you make your private income tax return. You do this by first making your annual financial statement and then completing and filing the NE attachment that you receive with the tax return. If you have a turnover of less than SEK 3 million, you can establish a simplified annual accounts. If you do this digitally, you can then transfer the data directly to the NE appendix of the declaration.

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Trading Companies

If you are a partner in a trading company, you must file your N3A attachment together with your income tax return, in which you account for your share of the trading company's earnings. If you are also going to declare to the trading company, this is done in income tax return 4. When this should be done is controlled by the company fiscal year.

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Limited Liability Company

The declaration process for shareholders in few-member companies is similar to that of co-owners of trading companies. In addition to your private income tax return, you must also file a K-10 attachment declaring dividends from the company and any gain or loss if you have sold shares in the company. The filing of the company's own income tax return is governed by its fiscal year.

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Check the data

As with your private income tax return, it is important to check the suppressed data for the company as well. If there is an error in the control data, there will also be errors in the declaration if you do not correct the data.

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See what deductions you can make

As an entrepreneur, you are allowed to deduct expenses that are necessary to run the business — regardless of your form of business. The difference, however, is that if you are engaged in an individual business activity, you make the deductions in your income tax return, while the deductions are made in the company's tax return if you are engaged in business activities joint-stock company or trading companies. If you run an individual company, you can use the Swedish Tax Agency Deduction lexicon to see what deductions you can, and can't, make.

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A common deduction is if you conduct your business from your private residence. If you are a sole proprietorship, you can deduct the cost regardless of whether you have a specially set up office or not. For those who run share sales or trading company it is required that the workroom be decorated in such a way that it can no longer be used for residential purposes in order for you to deduct for it. Instead, you can rent part of the house to the company. The company can then deduct the rental cost while you as the owner pay 30% capital tax on the excess rent.

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Reservations for individual firms

As an individual trader, you should look at the possibilities of being able to lower your tax profit. It can be done either by shifting part of the income from business activities to income from capital by making a so-called positive interest distribution. You may make a positive interest distribution when the capital base of the business is higher than SEK 50,000 at the beginning of the year. You can also make provisions for an accrual fund or an expansion fund to defer the tax effect and to be able to offset future deficits.

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After a tough few years for Sweden's entrepreneurs, it finally looks like we are moving towards brighter times. 2023 was marked by high inflation, rising interest rates and a sharp increase in the number of bankruptcies. However, if the concern clouds gathered at the beginning of 2023, we will now begin to see a brightening on the horizon in early 2024 instead. The Institute for Economic Affairs predicts that wages will rise faster than prices during the year, and after two years of increases in the key interest rate, the Riksbank is expected to lower it in 2024. This will give both households and businesses more room for consumption and investment. This may particularly benefit smaller companies, which are generally more sensitive to interest rates and have less room to face tougher times compared to large ones.

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In addition to the economy, there are trends in artificial intelligence, marketing and customer relations that are valuable for entrepreneurs to keep track of and which we will review in this article.

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Financials

As I said, the biggest area that will concern entrepreneurs will continue to be the economy and economic development. Inflation fell by the end of 2023 to levels just above the Riksbank's inflation target of 2 per cent and is expected to fall further during the year. High inflation has been the driving factor for the Riksbank's increases in the key interest rate, and as it now falls, the Riksbank is expected to lower the key rate during the year, which will mean relief for entrepreneurs on several fronts. Lowering the key interest rate leads to a decrease in interest expenditure for both individuals and businesses, thereby increasing the scope for consumption. Entrepreneurs can thus look forward to a year with less headwinds and in which sales revenue increases and financial stress decreases. Reductions in interest rates may also lead to improved opportunities for entrepreneurs to raise external capital, as well as the conditions for doing the same. Investments and investments that have been left aside in recent years therefore have the potential to disappear when it becomes easier to finance them again.

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Looking ahead, the government also presented two proposals in the autumn budget that will make it easier for entrepreneurs both in terms of costs and administration. One is that the turnover limit for when companies need to report VAT is planned to be raised from SEK 80,000 to SEK 120,000 on January 1, 2025. Thus, more small businesses will not have to add and account for VAT. The second is that they have launched a simplification package and set up a simplification council to work to reduce the regulatory burden and administrative costs for businesses in order to free up more time for core activities.

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Artificial Intelligence

One of the major themes of 2023 was the development and advancement of AI on a broad front. AI and machine learning have really been a part of our lives for a long time without us really reflecting on it, but as the development of generative AI in the last year has seen an explosion of interest in AI. For entrepreneurs in general, and smaller companies in particular, developments in AI represent great opportunities ahead. Many administrative tasks that previously had to be done manually may be automated with the help of AI, future projections will be more accurate and tasks that previously required external expertise will be carried out by the companies themselves in the future. As an entrepreneur, there is therefore value in starting to understand how AI could be used in your company to free up time and contribute to increased growth.

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Marketing

The conditions for success in marketing as an entrepreneur have improved significantly in recent years. It no longer takes either an agency, expensive equipment or a huge media budget to produce high-quality material and disseminate it. Most entrepreneurs today can manage marketing themselves with the help of digital tools, a plan for what the marketing will accomplish and continuously allocate time for it. Marketing is also one area where generative AI may have the greatest impact for entrepreneurs as it will simplify everything from the production of text and visual materials, to the development of plans and media investments. Something that will free up time that can instead be spent on analyzing trends and customer behaviors in order to then be able to adjust the marketing accordingly.

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Customer relations

As the economic pressure likely decreases and the purchasing power of society increases, it also means that entrepreneurs will have to spend less of their time being reactive and can instead start looking ahead and being more long-term in their priorities. One area that will therefore receive increased focus is trying to build strong and long-term customer relationships. Technological developments make it possible for smaller companies to offer customised customer experiences in a way that previously only larger companies with extensive resources could do. AI will also make available more advanced data analytics that business owners can use to better understand their customers' behaviors and preferences, thereby producing more targeted, relevant and personalized offerings.

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Supply chain problems, raw material shortages and rising electricity and fuel prices have led to a troubled world economy, with rising inflation and rising interest rates. We are in a turbulent time where it is easy to feel uncertainty. In this article, we therefore give tips on how you as an entrepreneur can think about the uncertainty that prevails.

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Price and cyclical sensitivity

The price and economic sensitivity of your industry is one of the first things you should consider as an entrepreneur. Do you offer a product or service that customers will continue to use even if times get worse, or will you need to adapt your offer? The cyclical sensitivity of your business will also affect how price sensitive your customers may be if you need to increase your prices due to increased costs. If you sell a product or service that your customers are in dire need of, they will be prepared to pay more for it. However, if you operate in a cyclically sensitive industry, price increases can have a big impact on your demand.

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Plan long term

During a recession, it can become tense in both society and the economy. In such situations, it's easy to become reactive if you don't have a long-term plan to follow. Making adjustments and ensuring that the company's finances can withstand tougher times is of course important. Sooner or later, however, the economy will turn to boom again and if you then only adapt your business to the current situation, there is a risk that your company will fall behind the competition. Having a long-term plan and having the courage to stick to it also reduces the risk of making hasty decisions that can backfire at a later date. By planning for the long term, you give your company the opportunity to grow and develop in tougher times, and also to be well equipped to gear up even more when the economy turns up.

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Review your agreements

When interest rates and commodity prices go up, it's a good idea to review your contracts — both from suppliers and to customers — so as not to face increased costs while reducing revenue. Therefore, review your local and supplier agreements and see if you can bind the contracts for some time to come to avoid raising prices for them. Even if it would not be possible to bind the contracts, it gives you an overview of the potential cost increases you may incur, and you can then budget for these. Similarly, you should not lock in prices to your customers too much to give yourself the opportunity to be able to increase prices if your costs increase.

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Inventory and Liquidity

It is always good as a company to have strong liquidity to be able to pay debts in the short term. However, in times of recession, it is especially important to have a buffer in case you suffer increased costs, which is why it is good to start planning for how you can strengthen the liquidity of your company. Another tip is to review your possible inventory. If you have the opportunity, it can be a good place to replenish the stock a little more than you normally would have done. In this way, you can ensure that you have access to products or components that may run out at the supplier, as well as postpone the risk that your company will suffer from any price increases in the supply chain.

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Marketing

Many companies choose to cut down on marketing when there is a recession when they are pulling down on costs in general. While it may look good with reduced expenses in the short term, it doesn't have to mean that it benefits your business in the long run. If you choose to invest more in marketing when your competitors cut back on it, you have the opportunity to instead increase your sales and take additional market share. Something that will not only benefit your company at the moment, but also by giving you a head start when the economy turns up.

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Take the opportunity to adjust the business

When the economy of society is at its peak, it is easy to see between the fingers that things are not quite working or performing at the level that was intended. A recession can therefore be an occasion when it becomes easier to dispose of, or wind down, parts of the business that slow down others or involve more effort than good. By doing so, you can have more time and resources to spend on parts of the business that generate better returns. It can also be a good opportunity to diversify the activities of the company to find new sources of income and to spread your risks.

Christmas is approaching, and for many companies it means the most intense period of the year. By planning smart and acting on time, you can not only increase sales, but also address challenges in a way that creates peace of mind for both you and your business. Here are some tips on how to prepare the company for Christmas in the best possible way.

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1. Secure the warehouse

Christmas's increased demand can quickly put pressure on inventories and logistics. Start with a careful inventory of your products to identify what needs to be replenished. If you depend on imports, be aware that supply chains are often affected by delays during peak times. Order items well in advance and prioritize your bestsellers.

• Analyze sales data from previous years to better forecast demand.
• Use inventory management systems to optimize flow.

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2. Streamline invoicing

Billing can easily become a stress factor if left to the last minute, so act ahead of time. A clear billing plan allows you to focus on driving sales during the Christmas trade rather than dealing with financial administration.

• Review and follow up on outstanding invoices.
• Automate billing using digital tools to save time.
• Create clear payment terms for customers to minimize the risk of late payments.

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3. Build relationships with Christmas gifts for customers

Christmas is a great time to show appreciation for your customers. Paying attention to your customers with Christmas gifts strengthens customer relationships and can also contribute to a little promotion of your business.

• Profile products with your logo, gift cards or personalized products.
• Consider sustainable or locally produced gifts to create a positive impression of your business.

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4. Plan ahead for next year

Christmas not only marks the end of a year, but also the start of a new one. By preparing for the year to come right now, you can go into next year with a clear strategy and less stress.

• Create a budget for the coming years and identify important investments.
• Make sure everything you need for January is in place, so you can start the year strong without delays.

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5. Reflect on the successes and challenges of the year

Christmas is a perfect time to evaluate the business. Think about what has worked well and what needs to be adjusted to make it even better. Analyzing the past year helps you set realistic goals for the future and a concrete plan gives you a clear direction that motivates both you and your team to reach new heights.

• Create a list of success factors and areas that can be improved.
• Set measurable goals for sales, customer satisfaction and development for the next year.

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6. Prioritize recovery

The holidays can be hectic but it is important that you as an entrepreneur also take care of yourself. By planning and preparing well in advance, you can free up time for time with the family and to rest up.

• Delegate tasks wherever possible and automate processes that save time.
• Try to make time for recovery so you can enter the new year full of energy.

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Summary

Preparing the company for Christmas involves a combination of planning and consideration for both the business and the customers. By following these steps, you can ensure that you and your business are ready to handle the opportunities and challenges of the holiday season — and at the same time create time to enjoy Christmas. Want help financing an investment in the run-up to Christmas? At Froda, you get access to finance tailored to your company's needs.