Nearly four in 10 of UK SMEs encountered financial challenges over the past 12 months, according to a survey for Nucleus Commercial Finance.
Research company Opinium surveyed 1,004 small business owners between October 30 and November 4, 2019, amongst 1,004 business owners of SMEs.
Of this group, a quarter (24 percent) of business owners dipped into their personal savings to address financial issues within their businesses, while 27 percent simply took no action, rather than seeking the funds they needed from elsewhere.
When asked which financial issues affected their business, impacts on margins due to price increases came first, with nearly half (48 percent) of business owners selecting this option. Other major issues businesses faced were:
Small businesses comprised of less than five employees were more likely to use personal savings to help their business (33 percent) or to take no action at all (40 percent). In contrast, large companies were more likely to borrow from a high street bank (27 percent) or an alternative lender (34 percent), if they faced financial difficulties.
Chirag Shah, chief executive, Nucleus Commercial Finance said: “We often see that businesses face financial difficulties, however, what’s alarming is that SME owners are using personal savings to support their businesses, or even more worryingly, not taking any action at all. As we enter a new year, we encourage business owners to be more vigilant of their finances and be more aggressive when it comes to growing revenue. Entrepreneurs should rest assured that there are options available and as an industry, we should be educating them on the benefits of seeking external finance. Together we can help SMEs be better equipped to tackle any financial challenges; boosting performance and ultimately improving the country’s GDP.”
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