Great News for Small Businesses: Failure Risk Halves

With all the doom and gloom of the past few years, it’s heartening to hear about any progress in fortunes of small businesses these days.

After the storm of uncertainty that’s been brewing with COVID, Brexit and the unsettled state of world politics at home and abroad, it’s great to hear that according to some, small businesses are now half as much less at risk of failure.

In an article published at SmallBusiness.co.uk, it appears that the London School of Economics has found that only one in seventeen small businesses are now at risk of financial collapse, compared to one in seven at the start of 2021.

This is a huge improvement and with all the headlines that we have been seeing lately. It’s easy to compare this to the sheer amount of companies that are said to be at risk and those that may have actually collapsed lately contributing to this fact, but this is still a comforting headline.

However, coupled with this is confidence taking a dip in March. Overall, many companies have expressed concern as to whether they feel they can continue with their financial situation. This may have something to do with rising prices of materials, energy and other factors that have been grouped together under the ‘cost of living crisis’.

The more cynical commentator could see this as simply recovery from COVID, the vaccine rollout being a success and lockdown restrictions being lifted across England and Wales all having a cumulative effect. Perhaps it is consumer spending contributing to more healthy states of cash flow. Whatever the reason, there is definitely solace to be taken from this upturn in fortunes no matter what type of business you are in.

Efforts towards business recovery

To underline this, action does appear to be being taken. For example, NatWest just held a meeting of the SME Taskforce, a group set up to address recovery in 2020. Meeting in Bradford, recently named as the 2025 UK City of Culture, various business leaders met to speak on the recovery and future of SMEs.

The mood seemed to be that if managed correctly, SMEs could be the key to the UK’s recovery in general. Emphasis was placed on collaboration and coming together to understand the challenges SMEs have.

One thing business owners appear to be neglecting is making the jump to using digital technology for their own. Perhaps it is a lack of skills that is proving a barrier.

In a recent survey by Lloyds Bank, a disappointing 1 in 10 businesses used the pandemic to get online. More needs to be done to perhaps uncover and understand what it is stopping those in business from exploring this potentially lucrative way of trading. One has to wonder of the businesses that failed in the last few years, how many simply refused or were unable to take advantage of digital ways of doing business?

All of this is of course also taking place under the shadow of political instability. The exit of Prime Minister Boris Johnson and the subsequent leadership contest that will follow is no doubt contributing to confidence issues in business. Whoever takes over will need to provide a strong hand for steering UK businesses through to recovery.

If you feel less than confident when thinking about your business facing the future, then get in touch with us today on 0800 975 0380 or email [email protected]