Food and energy costs remain central concerns for households and businesses because they influence everything from wages to margins to day to day operating decisions. Inflation is easing compared to the volatility of the last few years, but the picture for the next twelve months is still mixed. Prices appear set to rise more slowly, yet neither category is likely to fall in any meaningful way.

Food price outlook

Food prices surged during the supply chain disruptions of 2021 to 2023 and were pushed higher again by wage pressures, transport costs and global shipping instability. Although the pace of increase has slowed during the past year, prices remain high. Many clients still question why food costs have not dropped as headline inflation falls. The reason is that the underlying conditions that drove those increases have not disappeared. Agriculture, food production, and distribution still face labour shortages, higher input costs, and ongoing uncertainty in global trade routes.

The most likely outcome for the coming year is a gradual easing in the rate of food inflation rather than a reduction in prices. Supermarkets report calmer supply chains and producers appear more willing to absorb cost pressures in order to protect sales volumes. Better harvests in some regions and lower freight costs should also help. These factors together should keep the next year more stable than the recent past.

Energy price outlook

Energy prices have been among the most unpredictable elements of the recent inflation cycle. While the extreme spikes have eased, the underlying global influences remain. The UK is particularly exposed because it relies heavily on imported gas and is tied to international pricing. Global gas markets continue to react to geopolitical tensions, shipping disruptions and variations in European storage levels. These variables explain why energy pricing still carries a degree of uncertainty.

However, the direction for next year looks a little steadier.

What this means for business planning

The next year is unlikely to bring substantial falls in food or energy prices, but the environment should feel less pressured. This increased stability provides an opportunity for better budgeting and more confident forecasting. Hospitality businesses and manufacturers may find it easier to plan pricing strategies, menus and supply arrangements. Broader stability also supports decisions on energy efficiency projects since assumptions about future savings appear more reliable.

Most business owners know that progress matters, but many still hesitate when it comes to planning. It can feel like an extra task or something that only large companies need to worry about. Yet, in practice, steady planning is one of the simplest ways to create real progress in any small or medium sized business. The link between the two is stronger than many people realise.

Planning works because it forces clarity. When business owners pause to think through priorities, patterns and pressures, they begin to see what is really driving results. Cash flow issues, capacity limits and pricing decisions all come into focus. This clarity helps owners make better choices, because they can see which actions will genuinely move the business forward and which are distractions. Without planning, decisions are often reactive and progress becomes slow or inconsistent.

Regular planning also builds momentum. A short monthly review of sales, costs, workload and upcoming commitments can help owners stay ahead of issues. They spot pressure points sooner and have time to adjust. Small, steady actions taken throughout the year often make far more difference than a single big push at year end. The cumulative effect is smoother trading, fewer surprises and a clearer path towards goals.

Another benefit is accountability. When owners write down their intentions, it becomes easier to measure progress. Plans do not have to be complex. A simple list of priorities, actions and expected outcomes is enough to bring structure. Even this light level of discipline strengthens focus and encourages follow through. Over time, owners start to recognise how much difference these small habits make.

Many business owners focus on sales as the main driver of growth. Sales matter, but they are only part of the story. Real financial growth happens when a business retains profits. Keeping a portion of earnings inside the business, rather than extracting everything each year, creates stability, resilience and long term value. It is one of the most reliable ways for a business to strengthen its financial position.

Retained profit is simply the surplus left after all costs, tax and drawings or dividends have been paid. When owners choose to leave some of this in the business, the financial base becomes stronger. Cash balances increase, working capital improves and the business has more freedom to act. This is important because many opportunities appear only when a business is ready to respond. A new contract, a piece of equipment, or an unexpected staff change often needs quick decisions. Financial strength gives owners room to choose rather than react.

Another advantage is the reduction of financial strain. When profits are taken out in full, the business can become fragile. Seasonal changes, delayed payments, or rising costs can suddenly create pressure. Retaining profits reduces this risk. It smooths the ups and downs of trading and reduces reliance on overdrafts or short term borrowing. Over time, this lowers costs because the business is not constantly paying interest or reshaping its finances to manage cash shortages.

Retained profits also support growth by funding future investment. Whether it is new technology, better equipment, improved systems, or additional staff, every investment needs capital. Using retained profits means the business can invest without taking on unnecessary debt. This keeps control in the hands of the owners and protects future cash flow. In many cases, even small retained amounts, built up steadily, can support meaningful improvements.

There is also a psychological effect. When owners see their business building reserves, confidence grows. Decisions become more strategic and less driven by short term pressures. This confidence often leads to better long term planning, more thoughtful hiring and a clearer focus on profitability rather than turnover alone.

Finally, strong retained profits increase the value of the business. Buyers look for organisations with reliable earnings, low debt and healthy reserves. A pattern of retaining profits signals discipline and financial strength, which can significantly improve valuation.

Retaining profits is not about restricting personal income. It is about giving the business the capacity to grow, adapt and remain competitive. When owners take a long term view, retaining profits becomes one of the simplest and most effective tools for building financial strength.

Many small businesses rely on a mix of overdrafts, card facilities and short term loans to maintain day to day cash flow. During the past year banks and alternative lenders have become more cautious, and several indicators suggest that credit conditions will tighten further during 2026. For business owners, a little early preparation can make a noticeable difference.

Lenders are placing greater emphasis on consistent record keeping, realistic forecasts and clear evidence that a business understands its cash cycle. This means that up to date bookkeeping is no longer just a compliance task. Regular management information can demonstrate stability, provide reassurance to lenders and highlight any seasonal pressures that may need attention.

It is also sensible to review existing credit facilities. Many overdrafts and business loan agreements include renewal terms, and these can be harder to negotiate if left until the last moment. Checking the renewal dates, interest rates and any security requirements can help avoid unexpected changes that affect cash flow.

Businesses that rely heavily on card funded working capital or revolving credit should consider whether these facilities remain suitable. Even a small increase in interest rates or a reduction in limits can put pressure on margins, particularly in sectors with tight cost structures.

Planning ahead can reduce risk and improve financial resilience. Reviewing cash flow forecasts, maintaining timely financial records and having early conversations with lenders can help small businesses enter 2026 with greater confidence and fewer surprises.

A limited company is a separate legal entity. In normal circumstances, its debts belong to the company, not to the directors. This is one of the central advantages of incorporation. However, the protection is not absolute. Directors have duties in law, and if those duties are not met, there are situations where personal liability can arise. Understanding the main risk areas helps directors manage their responsibilities with confidence.

The most common route to personal liability is through personal guarantees. These are often required when arranging finance or long term commitments. They appear in bank loans, leases, asset finance, invoice discounting and sometimes supplier credit arrangements. A personal guarantee means that, if the company cannot pay, the director promises to pay instead. Many directors accept guarantees without fully recognising their implications, sometimes as part of standard paperwork. If the business later becomes insolvent, the creditor may enforce the guarantee directly against the director.

Another area where liability can arise is wrongful trading. This occurs when directors continue to trade at a point where they knew, or should have known, that the company was unlikely to avoid insolvency. Once insolvency becomes likely, directors must act to minimise losses for creditors. Continuing to take new orders, incur new debts, or draw full salaries without regard to the company’s position may be seen as failing in that duty. If wrongful trading is found, a director can be required to contribute personally towards the shortfall to creditors.

Fraudulent trading is a more serious matter. This involves intent to deceive. Examples include deliberately misleading creditors, falsifying records, or taking payment from customers when it is clear the business will not be able to supply. In these cases, personal liability is likely, and criminal sanctions may also be possible.

Misfeasance relates to breach of duty. Directors must act in the best interests of the company and use company assets responsibly. Issues arise where funds are drawn inappropriately, company assets are used personally, records are not maintained, or tax liabilities are ignored. If the company enters liquidation, transactions will be reviewed. Directors may be required to repay sums that were taken improperly.

HMRC can also pursue directors personally in some situations. If there is repeated or deliberate non-payment of PAYE, NIC or VAT, HMRC may issue a personal liability notice. This is generally used where behaviour is seen as deliberate or reckless rather than a one-off difficulty.

If a company fails and a related business continues afterwards, this can also be examined. Forming a new business after insolvency is not itself prohibited, but if it appears to be an attempt to avoid debts unfairly, directors may face investigation or disqualification.

Good practice reduces risk. Clear financial records, cash flow forecasting, early advice when trading becomes difficult, care with drawings, and caution when asked to sign guarantees all help protect directors.