One In Ten UK Small Businesses Considered Shutting Shop
According to a recent survey from global insurer Zurich, more than 1 in 10 British small and medium-sized businesses have revealed that they have considered closing down in the last three months. This is as a result of the impact of the current economic situation, which has caused many companies to struggle with their finances.
Not only this, but the study also showed that the majority of small and medium-sized businesses commented that they are fairly or very concerned about the UK’s current economic climate. In fact, 38% of people in the survey commented that they were very concerned with the current state of the economy and the impact that this will have on their own business. 84% said that they are not confident that the economic situation will improve over the next quarter, and 69% said they are still not confident when they look ahead to the year 2013.
When asked about the Eurozone crisis, nearly half of the decision-makers in the small and medium Enterprises said that they believed the crisis would hit the UK consumer confidence and have a knock-on effect for companies in the coming year.
The fact that 1 in 10 small businesses have said that they have considered closing down means that the UK could be facing a gloomy picture over the next year.
Despite the boost to the economy due to the Queen’s Jubilee weekend and the London 2012 Olympics, many businesses are still finding it difficult to stay afloat.
7% of businesses in London have said that they have considered closing down, totaling
a 12% figure in the South overall. More small businesses in the North have considered closing down, with 17% of small or medium-sized enterprises saying that they have considered shutting completely. It is also thought that a lack of financial backing and funding, including the traditional business loan, is another reason why companies across the UK are struggling.
However, there is some hope on the horizon. When asked about what is the most pressing opportunity for their business, 22% of businesses said that it was web trading and online marketing which looked bright. Not only this, but in the last three months around 58% of businesses have expanded their business activities to target new customers. Also, despite the Eurozone crisis, 22% of British small and medium businesses said that they are looking to expand their business overseas over the next year. Alternative methods of business finance, such as the merchant cash advance, also mean that businesses are finding other ways of backing vital business plans.
Richard Coleman, who is the Director of SME, Zurich, commented on the results of the study, “It is clear that SMEs are feeling the strain of an uncertain economic environment. Our research shows their confidence has been hit and they are concerned about the future. While it’s encouraging that SMEs are looking for new opportunities to ease the pressure, there are considerable risks associated with development and expansion, particularly when owners are using personal capital to fund such activity. This makes it vitally important that SMEs have a complete understanding of the risks present in such a fragile environment, and are fully capable of taking the appropriate steps to mitigate this risk and minimize the impact of external pressures.”