Hitachi Capital

Number of small businesses fearing collapse doubles

The number of small businesses predicting growth for the next three months (net: 36%) has hit its lowest level for over a year (Q2 2017: 35%), according to new research.

The latest business barometer from Hitachi Capital Business Finance has revealed that 10% of small businesses predicted that they would struggle to survive – up from the 5% reported just three months ago.

The proportion of small business owners fearing collapse has been consistent at around 4-5% for seven consecutive quarters, but the figure has now doubled.

Overall, eight industry sectors saw a quarterly rise in the proportion of small businesses that feared for their future.

Regionally, the North East and London witnessed a sharp rise in the percentage of small businesses worried about their survival, while figures doubled in Wales.

Source: Hitachi Capital Business Finance

“For the last year, our research has shown that the small business community has seen political and economic change as an opportunity,” said Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance (pictured above).

“Many have looked to expand into markets beyond the UK and create jobs in the communities where they do business.

“Our latest findings, though, suggest the protracted nature of Brexit negotiations may now be taking its toll.”

Small businesses that predicted they would struggle were those most likely to be grappling with how they could improve their financial health.

They were most likely to be prioritising a reduction of fixed costs (41% compared with a national average of 37%), improving cash flow (27% vs 20%), looking for funding beyond a bank (12% vs 5%) and reassessing their finance commitments (18% vs 10%).

Gavin continued: “It’s also clear from our latest research that small businesses are focusing heavily on the financial health of their business – whether this be improving cash flow, getting tougher on late payment or looking for better ways to secure finance.

“The key thing is that they shouldn’t leave it too late.

“With a weak pound and interest rates on the rise, small businesses are entering a challenging era. 

“We are here to help businesses stay in business – good times and bad.”

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