Research by Funding Options has revealed that half (51%) of UK small and medium business owners need more help to take control of their finances – equating to 2.86 million small businesses who are struggling alone. The results also reveal that a third (33%) of small business owners have previously found themselves in financial difficulty with a similar proportion (32%) saying they have lost sleep worrying about their business finances.
There are 5.6 million small businesses in the UK, employing over 16.3 million people, making their success crucial to the UK economy. Following months of financial uncertainty in the UK, the news that the first quarter of 2019 saw company insolvencies reach their highest levels in five years demonstrates that it’s more important than ever that businesses are in full control of their finances. Yet nearly a quarter (23%) have no idea that they’re going to go into the red until it happens, increasing to nearly half (46%) of business owners aged under 35. Only half (53%) regularly forecast their finances to help them keep track of cash flow.
With small business owners devoting their energies to their products and services, having the time to focus on the finances is often a luxury they do not have. Just 7% of small businesses review their finances more than once a month, with nearly a quarter (23%) only doing so once a quarter. 17% of those surveyed said that they don’t have any formal reviews of their business finance at all, and this was most common among sole traders with nearly half (46%) admitting this to be the case.
Ryan Edwards-Pritchard, Managing Director of Funding Options, said:
“The primary focus of any small business should be on its product and customers and so it’s easy for financial operations to take a back seat. Along with day-to-day challenges, additional factors such as the huge uncertainty around the outcomes of Brexit only add more pressure. It’s really alarming how many small businesses have gone into administration in 2019 already and it’s no surprise that half of UK small businesses are looking for more support with their finances.
New tools entering the market are giving entrepreneurs the power to take full charge of their finances, simplifying everything from tax returns to cash flow projections and if utilised we will hopefully see more organisations survive and thrive – putting an end to sleepless nights.”
Being able to access funding when it’s needed is also key to a small businesses’ success but the study revealed that three in ten (28%) small businesses have struggled to access funding from mainstream lenders, with one in five (21%) even having to approach their family and friends for money after being turned down by the banks.