Keeping your SME stable during economic uncertainty
There have been a lot of political changes in recent months, but the outlook for small and medium-sized enterprises (SMEs) remains gloomy.
According to recent research by Virgin StartUp, half of small business owners are worried their business might not survive the next 12 months.
This is a stark contrast to the mere 11 per cent who felt this way in November 2023.
Concerns and a lack of confidence
The ‘Founder Barometer’ report by Virgin StartUp reveals several critical insights into the challenges faced by SMEs:
- Confidence levels – Fewer business founders are confident about their financial future, with confidence dropping from 66 per cent in November 2023 to 45 per cent today.
- Business rate concerns – A significant number of business owners are calling for the new Government to scrap business rates (33 per cent), increase support for local regions outside London (32 per cent), cut Corporation Tax (26 per cent), and raise the VAT threshold (24 per cent).
- Cost-of-living crisis – This is the biggest concern for 52 per cent of SME owners, a substantial increase from last autumn.
Strategies to keep your SME stable
Although there are concerns for many SMEs, there are processes and strategies to put in place to keep your SME stable.
Reevaluate financial planning
A thorough review of your financial planning can provide a clearer picture of your business’s health and prospects.
Revisit your budget to identify areas where costs can be reduced without compromising the quality of service or goods that you provide.
Monitor your cash flow closely and look for ways to improve it, such as negotiating better terms with suppliers or offering incentives for early customer payments.
The Government often supply support schemes to a wide range of sectors.
Keep a look out for anything relevant to your business and take advantage of them where possible.
Make use of any available tax reliefs and incentives, such as R&D tax credits, which can help reduce your overall tax burden.
Focus on employee well-being
If your employees are happy, then the likelihood of improved productivity and overall morale is boosted significantly.
To do this, encourage employees to build support networks within the business and externally.
Online communities and social media platforms are great tools for this strategy.
Mental health resources and support, such as counselling services or mental health days should be readily available.
Innovate and diversify
Innovation and diversification can open new revenue streams and reduce dependency on existing markets.
Nearly 37 per cent of business founders are planning to increase their products or services.
Explore how you can expand your offerings to meet new customer needs.
Consider raising new funds or investments to support your growth plans. This might involve seeking venture capital or other forms of financing.
Strengthen community ties
Building strong community ties can provide invaluable support and opportunities.
Actively participate in local business networks and online communities.
One in five SME founders now get their most valuable advice from these sources.
Support from family and friends can be a great resource.
Family support in particular has been a top factor in maintaining mental health, with 53 per cent of business owners stating this in Virgin StartUp’s research.
Not all doom and gloom
Despite the challenging environment, there are sprouts of hope.
The research found that many SME owners remain optimistic, with 70 per cent looking to expand in the next six months.
If you need expert financial advice on managing your SME, our team of experienced accountants is here to help. Contact us today to learn how we can support your SME.
