Difficult times ahead for small businesses - Resolve Group UK

Difficult times ahead for small businesses

Resolve Group UK

Difficult times ahead for small businesses

The latest Federation of Small Businesses (FSB) Small Business Index (SBI) published recently shows that small firms in the UK are most concerned about weak economic growth, reducing consumer demand and high lending rates having a detrimental effect upon the growth of their businesses.

More than half of the small companies surveyed now regard the domestic environment as a significant barrier to growth. The persistent political uncertainty and concerns associated with planning, or not planning, for Brexit are having a seriously negative impact and are considered to be the primary concern for constraining growth.

The SBI measure of UK small business confidence has fallen to -9.9, the lowest level since the wake of the financial crash in 2011. The outlook is bleak as 67% of small firms do not expect their performance to improve this quarter, with those in the accommodation and food services, retail and manufacturing sectors reporting the worst results.

In addition access to appropriately skilled staff, lack of consumer demand and rising labour costs are also flagged as primary barriers to growth.

As April approaches, small companies will also have additional challenges in the forms of increased business rates, rising costs of employment with the higher living wage and operational changes to the tax payment system with Making Tax Digital.

To add to the pressure small businesses are already facing the SBI also shows that the cost of borrowing has hit a four-year high, with the vast majority of businesses offered lending rates above 4% making access to finance increasingly costly and difficult.

The outlook for small companies in many sectors seems difficult at best and 2019 looks to be a challenging year for many. Our advice, as always, is that early action is the key to avoiding or surviving financial difficulties. The difference between businesses that survive and thrive and those that fail is how well they manage difficulties.

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