As a small business owner, just starting out, consider the following question; where do you see yourself in five years’ time?
You might be imagining a larger workforce, development of your product or service, consistent cashflow, or bigger premises but would it ever cross your mind that instead of all those things, you may find yourself closing the doors for good?
The reality is that, after five years, roughly 50 per cent of any cohort of start-ups will have ceased trading.
On top of this, it now seems that small business owners are increasingly aware of the various challenges they are likely to face on the journey to becoming established and ultimately, their vulnerability.
A new study has revealed that the number of SMEs predicting they could close has doubled from five per cent to 10 per cent, in the past three months.
Produced by Hitachi Capital Business Finance, the report makes for worrying reading, particularly as the proportion of small business owners reporting concerns about business failure has previously remained consistent, at around four to five per cent.
Key findings include:
- Retail is the sector most fearful of collapse (17 per cent of businesses afraid of failure in Q3)
- SMEs growth predictions for the next three months hit its lowest level for more than a year
- SMEs in the North East believe themselves to be most at risk (20 per cent concerned about survival in Q3, up from just 2 per cent in the previous quarter)
- Welsh businesses followed close behind (14 per cent of SMEs worried about going under in Q3)
- Eight of the industry sectors tracked by Hitachi Capital saw a quarterly rise in the proportion of businesses fearing for their livelihoods.
Hitachi Capital said: “For the past year, our research has shown that the small business community has seen political and economic changes as an opportunity.”
“Our latest findings, though, suggest the protracted nature of Brexit negotiations may now be taking its toll.”
Further evidence to support the notion that SME’s confidence is waning comes from the Daily Telegraph’s Business Tracker, which examined the Twitter posts of 25,000 UK companies and businesspeople between 28 May and 25 June.
Analysis revealed that, for the first time since February, the difference between optimistic and downcast comments was less than 15 percentage points; 57 per cent and 43 per cent respectively.
Will Brown of Impact Social, the company who analyses the data obtained via the business tracker, said: “”There’s a palpable sense that even the slightest false move on Brexit rocks small business confidence…this month’s analysis shows that their confidence is on a knife edge.”
Martin Williams, Partner at George Hay, said: “Brexit represents a huge change for the UK’s small businesses and, with only six months to go, our withdrawal from the EU is weighing heavy on the minds of business owners up and down the country.”
“Negotiations have certainly gone on longer than many of us initially anticipated and yet businesses are really none the wiser as to how Brexit will impact upon them going forward. This feeling of being in ‘limbo’ is clearly starting to bear down on small business owners.”
“The requirements of local businesses must be met by those they are relying upon for support, such as Local Enterprise Partnerships (LEP’s). Making sure that the smallest firms are actually aware of the support schemes available to them must be a priority going forward if we are to preserve their ambitions for growth and confidence in the future.”
A large proportion of our client base is made up of a wide range of small, local businesses and this is an area in which our team has a wealth of knowledge. We work with businesses across a range of industry sectors and we understand the issues facing them today. We can help – so find out how here.