New Year’s Resolutions have a long history. When Ancient Roman emperor Julius Caesar named 1 January the start of the new year in 45BC, the Romans would make promises for the year ahead like many still do today.
Thousands of years may have passed, but the ancient tradition of giving something back or spending time with others still resonate. Of the 21% of people surveyed by YouGov who say they have made resolutions for 2023, 17% say they want to spend more time with their families, 9% want to volunteer or do more charity work, and 5% want to fundraise for charitable causes.
Booming sectors
A range of industries benefit from New Year’s Resolutions. It’s clear which ones ramp up their advertising and marketing in January. Diet plans, gym memberships and fitness apps, as well as personal finance products, are among those reaching out to potential customers looking to change their habits in 2023. Retailers and holiday companies offer sales in January to tempt consumers with special offers and something to look forward to in the coming year.
It’s big business, too. The global diet industry is worth an estimated £31.8bn a year, according to the Business Research Company, and the health and fitness industry contributes an annual £74bn to the global economy, says the Global Health and Fitness Association. Our changed eating and drinking habits are fuelling newer sectors, too. The UK market for meat substitutes is the largest in Europe – worth over €500m (£443m) according to Statista figures – reflecting the rising popularity of Veganuary. Statista also predicts the non-alcoholic drinks market to grow annually by 3.64% until 2027, no doubt fuelled by increasing numbers of people taking part in Dry January. Four thousand people signed up in its first year of 2013, and last year 130,000 people committed to not drink alcohol for the first month of the year.
But it’s not just New Year’s Resolutions that change purchasing patterns in January. Religious and cultural festivals celebrated around the UK result in different levels of consumer spending. Chinese New Year, often celebrated in January, is traditionally a high spending period for both Chinese Britons and tourists to the UK.
One might assume that spending drops in January after people have made many festive purchases in December. That’s partly true: in January 2021, Nationwide found that non-essential spending dropped 13% from the previous month. However, consumers spent 43% more on discretionary products and services in January 2022 than they did in January 2021. Spending on holidays went up 379%, for example.
Understanding industries
These regular fluctuations in consumer spending are an important factor that must be considered by chartered accountants when servicing clients. “It’s really important to understand the industry you’re working in,” says Zuleikha Cassim, Partner at independent accountancy firm SRLV.For example, she says, during the 30 days of Ramadan when people are fasting during daylight hours, they don’t have time to cook because they might be working or going to the Mosque, so takings increase at takeaway restaurants. “When Eid comes [and fasting ends] there is suddenly a dip in spending and you need to understand this,” she adds.
“The varied work performed by chartered accountants provide companies with valuable insights into their clients’ business needs at this time of year. Even if a company manages their bookkeeping and VAT internally, we can still advise them that they may have increased sales during this period, so they need to have adequate stock and staff available. Additionally, the internal bookkeepers will be posting more transactions, so the debt collections in February will also increase,”’ Cassim says. This will affect cashflows, as well as many other factors.
“It doesn't matter whether you're the partner or a junior on a job, as an accountant you need to understand the client’s industry. And you need to think of what additional value you can provide by looking at the current trends in their industry,” she adds. “If you are looking at monthly management accounts, you can identify if there are specific spikes in customer purchases and consider why. For instance, if it’s Chinese New Year, you might expect more products from suppliers in the Far East to be sold over this period.”
Chartered accountants can also provide insight on whether sales have changed because of an economic shift in the last year or because of an annual expected shift. This kind of ‘top-end work’ really adds value to every area of a business’s operations and provides an opportunity for chartered accountants to highlight their own knowledge or skills.
“Even when you are at the very beginning of your career, you should take each job and understand the client in order to develop a skill set within that industry, so you can guide them more strategically” Cassim says.
The cultural practices people engage in at New Year may shift over the years, but the changes in spending that occur in January and the impact on businesses show that the roles finance professionals play are crucial to every single industry.