New research from the Hitachi Business Barometer has shown an notable increase in the number of small businesses fearing collapse. Although political uncertainties and interest rate hikes continue to dominate the news, most small business in fact reported that they are concerned by more everyday issues like cash flow and rental costs. The good news, then, is that these are concerns which can be addressed.
Hitachi Capital’s Business Barometer keeps tabs on how confident small business are feeling by conducting surveys every quarter. For two years, a mere four to five percent of those surveyed were concerned about potential collapse. In the third quarter of 2018, however, the figure doubled to 10%.
While the news represents a serious jump, it is skewed by the retail and hospitality sector, which has seen major players like Carpet Right, House of Fraser and Jamie's Italian forced to close outlets. There were also major regional differences affecting the headline figure, with SMEs in the North East, Wales and London more worried than peers elsewhere in the UK.
Sweating the small stuff
A more interesting takeaway for SMEs across the country is perhaps the focus of these small firms’ concerns. When questioned on possible solutions to their financial issues, the most common proposal was seeking a reduction in fixed costs, a solution cited by 41% of concerned small business owners.
The next most common approach among these firms was attempting to improve cash flow. 27% of respondents said this would be their go-to solution, compared to just 20% among firms who were more optimistic about their business growth. In contrast just 5% of concerned businesses planned to hire staff, with another 5% considering investing in new equipment.
Finding simple solutions
This shows that UK SMEs are ready to go back to basics to protect their businesses, and it could be a sound strategy. Some experts are already advising businesses to cut overheads and build reserves, a task that will be easier if cash flow is improved.
Late payments cause cash flow issues for a reported 20% of small businesses, so taking steps to address this problem could make a big difference. With big players like Barclays moving to invest in fintech like automatic invoicing service MarketInvoice, it’s becoming easier to manage payments.
However, late and unpaid invoices are always a risk. For advice and information about how Dukes Bailiffs ethical enforcement services can help you reclaim these debts, contact us today.