Small businesses
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Small businesses get no-deal Brexit survival guide amid fears firms are not ready

Small businesses have been issued with guidance on how to prepare for Brexit amid increasing fears SMEs are not ready for a no-deal.

UK Finance – the trade body for the UK’s banking and financial services sector – has urged businesses to speak to their banks about extra finance as soon as possible and consider the impact of potential changes to trade arrangements.

It said the industry had the capacity to support businesses “whatever the outcome.”

Firms have also been told to capitalise on the opportunities of Brexit to maximise growth in an online guide published this morning.

Earlier this month Bank of England governor Mark Carney warned that half of UK businesses were not ready for a no-deal Brexit, according to it various recent surveys.

As uncertainty around Brexit looks certain to go down to the wire, UK Finance has issued guidance for SMEs on how to prepare for Britain’s departure from the EU.

The campaign has also been backed by the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and the Confederation of British Industry (CBI).

“The banking and finance industry has the capacity to support viable businesses whatever the outcome,” UK Finance chief executive Stephen Jones said.

“Any business customers who may have additional financing requirements should begin engaging with their provider now, as the earlier they do so the easier it will be,” he added.

The online guide lists sector specific information hubs to help firms develop contingency plans and provides details on how each bank has committed to help firms around Brexit uncertainty.

Businesses that don’t export or import directly have also been urged to check with customers and suppliers to pre-empt any changes.

FSB chairman Mike Cherry said: “With less than 40 days to go until the UK leaves the EU on 29 March, it’s important for small businesses to prepare for the pressures that may well affect them, especially if we end up with a no-deal Brexit on that date.

He added: “As part of that preparation, we recommend that small business owners and the self-employed talk to their banks or other finance providers as they may well need help to extend overdrafts, seek extra finance or secure extra flexibility for repayment plans.”

Source: City AM

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UK SMEs keen to seek alternative finance in 2019 despite Brexit

More than one-quarter of UK businesses expect revenues to grow by more than 10% in 2019, despite concerns over the potential impact of Brexit.

According to a report from asset-based lender Independent Growth Finance (IGF), their growth ambitions come despite nine out of 10 saying they have concerns about the future of the economy.

IGF’s Powering Freedom Report found that, among British businesses turning over between £1 million and £500 million, 69% of companies expect an increase in revenues in 2019.

To facilitate these ambitions, 71% of businesses are seeking an average of £1.1 million of funding over the next 12 months. This will be used to finance key areas of investment including technology (37%), staff retention (30%) and marketing (27%).

However, traditional lending channels remain slow, with 53% of businesses typically having to wait at least a month for a funding decision in 2018, while nearly one-third have waited three months or more.

As a result, more businesses are considering alternative forms of finance, IGF executives say.

While traditional bank funding remains the top source of finance (67%), the report found that 27% of businesses now use invoice financing and 22% use other asset-based lending facilities.

John Onslow, chief executive officer of IGF, said: “British SMEs are the lifeblood of this country. It is encouraging to hear how many are forecasting meaningful growth in 2019.

“Such a large number of businesses seeking more than £1.1 million in funding shows that businesses want to seize control of their financial futures. Yet our findings suggest many struggle to find quick and flexible funding. With uncertainty on the horizon, SMEs are refusing to stand still. Instead they are pushing for ambitious growth and alternative funding solutions.”

Source: Asset Finance International

International Trade
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Why UK Businesses Need to Trade Internationally – The Key Benefits of International Trade for UK SMEs

The Key Benefits of International Trade for UK SMEs – As a business, you’re always trying to find and break new grounds to gain that competitive edge. But, have you considered going global yet?

The history of the world as we know it has been shaped by a complex concoction of ideas, events and people.

But there has always been a strong, undeniable driving force behind much of the development we’ve seen in the post-industrial revolution era: natural resources. The quest for the very best of everything that our planet has to offer has built, transformed and even destroyed civilisations, and international trade is a vibrant reminder of that fact.

Today, no country can afford to sit back and not engage in international trade. Many of Western economic policies stem directly from trade-related reasons and thousands if not tens of thousands of companies in the UK keep the wheel of our international trade turning.

But while all this happens, what does international trade mean for you and your business?

In the more-connected-than-ever world, you can’t possibly afford to ignore the possibilities that exist around the world. If you’ve been apprehensive about the seemingly complex international trade puzzle, let us break some things down for you.

Before that, let’s take stock of where things stand from an SME point of view.

More and More SMEs Are Trading Internationally

Thanks to consistent efforts of successive governments, international trade has seen some promising numbers in the last few years.

Although there has been a marked drop in overall exports in the past two years due to puzzling developments and speculations around Brexit, the overall number of SMEs exporting internationally has increased. The latest figures released by the government indicate that the number of SMEs exporting products and services internationally rose in 2017 by 6.6%.

“With more and more SMEs engaging in international trade (especially exports), it’s clear that it’s indeed possible even for a small business without millions of pounds in cash reserves to expand their operations, customer base and influence around the world with success.”

At 235,000 and counting, the SMEs trading internationally account nearly for 10% of all SMEs in the UK.

Benefits of International Trade for UK SMEs

While there can be cited dozens of benefits of international trade, here are the important ones that UK SMEs need to know:

A. International Trade Allows for the Diversification of Operations

It’s probably the most apparent benefit of going global for SMEs.

As a business trading internationally, you can easily diversify many of your business operations. This includes the two end-points of business – paying customers and suppliers whom you pay. You can access diverse technologies, market opportunities, natural resources and human resources, and make them all work in your favour.

B. Diverse Operations = Better Risk Tolerance

Risk tolerance is a business metric that defines how much of a leeway a business can have against various risks – from market events to uncontrollables like natural calamities.

When you start trading globally, your business automatically spreads much of its risks over a wider geographic area. Of course, this comes with additional trading risks, but they usually offset themselves with associated rewards. Essentially, businesses that import/export can tolerate negative events without sustaining much damage, as opposed to domestic businesses that can suffer irreversible damage.

For example, an unfortunate event like an earthquake can bring your manufacturing operations and domestic demand to a standstill. But if you export the manufactured goods internationally, you can still move the surplus inventory off your warehouses, maintaining the incomings relatively unscathed.

C. Trading Internationally Opens Up New Channels of Revenue

It’s no secret that you can’t have every type of demand in a single market. If you trade only domestically, your operations will always be limited to a certain type of demand. Any fluctuations in those demand forces will have a direct impact on the revenue.

Alternatively, when you trade globally, you can add multiple, previously-untapped revenue channels to your operations. This is just an extension of the previous risk tolerance argument we made, but it’s definitely one of the highlights UK SMEs need to think about.

D. International Trade Isn’t Crippled By Finance Bottlenecks Anymore

The second half of the 20th century was marked by epochal turns. The World War II started a chain of events that was propagated further by the Cold War, followed by the oil-centric upheavals in the Middle East. All these events meant one thing – the money gradually dried up from all international trade that wasn’t related to oil.

Lenders were unwilling to deal with foreign suppliers or banks, making letters of credit an irrelevant option for businesses. Today, we are glad to report, this isn’t the case.

Even a small business with limited capital can easily have letters of credit issued to the supplier’s bank without any problems. Thanks to the good perception UK businesses have in foreign markets, there are fewer things to worry about today than ever. If you’re exporting goods or services, you can just as easily arrange for flexible finance packages that keep the operations running smoothly.

When it comes to trade finance, Commercial Finance Network is an automatic choice for hundreds of UK SMEs. Being an industry-leading whole of market broker, we help UK SMEs access a diverse panel of lenders who bring on board decades of global trade experience. High acceptance rates, customised loan terms and fast approvals are just some of the features that make our trade finance services popular among businesses across the UK.

E. You Can Easily Beat Domestic Competition

Trading internationally means trading on a bigger and wider canvas. By going global, you can make sure that your business has an edge over domestic competitors.

F. A New Lease of Life for the Service Industry

Service provider businesses are among the fastest growing businesses of the 21st century, thanks largely to the internet effect. Given that the UK is one of the most important financial markets of the world, it’s no wonder that UK service providers – especially in the technology, financial and education sectors – have been reaping the rewards of trading internationally.

If you run a service business, you can – at relatively lower cost spreads – access and seize foreign markets.

G. Trading Internationally Promotes Innovation

Innovations isn’t just a buzz word – it’s the primary catalyst for business growth today.

If your business operates in tech, manufacturing or financial sectors, you know this first-hand. Innovation in a far-away market can often have an tearaway effect on your local performance. In such times, it pays to be connected to the world at large – something trading internationally lets you do.

Explore the World of Opportunities With Commercial Finance Network

Whether it’s sourcing better, cheaper equipment from overseas suppliers or exporting goods/services to foreign customers, every well-thought-out international trade move can be a game changer for your business.

At Commercial Finance Network, we help UK SMEs realise their global trading goals with robust, flexible and customised trade finance solutions – from affordable import-export finance to universal letters of credit. Let us worry about mediating with foreign banks and suppliers while you focus on your business.

To request a quote or talk to our trade finance experts, click here.

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London is one of the top 15 cities in the UK to start a small business

Research by card payment solution’s provider Paymentsense reveal the top 15 best cities in the UK to start a business.

Starting a business can be an exciting endeavour, but getting through the first five years is challenging. The cost of rent, consumer demand, beating the competition, and keeping your cash flowing are often tricky things for SMEs to juggle.

Based on factors including business survival rates, weekly salary, average rent, population, and the number of employed adults in the area, they worked out which UK cities offer the best environment for prospective SMEs. If you’re thinking of embarking on a new venture this year, take a look at the below 15 places for starting a business.

15. London

It’s probably no surprise that the capital of the UK, which is often considered to be a leading global city, made the list. London accounts for roughly 30% of UK GDP and is a major location for finance, both nationally and internationally. As well as this, it thrives in the media, technology and tourism sectors.

5-year start-up survival rate: 39.3%
Average weekly pay for full-time workers: £713.20
Average monthly cost to rent a 1-bed city centre apartment: £1,705.35
Population: 7,556,900
Number of employed adults: 3,817,203
Money available per week: £2,722,429,179.60
Index score out of 5: 1.36

14. Glasgow

This city has Scotland’s largest economy and the third highest GDP per capita out of all the UK’s cities. Glasgow has seen growth in its communications, biosciences, healthcare, retail, finance, and creative industries. Tourism is also strong in Glasgow, as it’s one of the most popular holiday destinations in Scotland.

5-year start-up survival rate: 36.1%
Average weekly pay for full-time workers: £573.60
Average monthly cost to rent a 1-bed city centre apartment: £624.75
Population: 591,620
Number of employed adults: 280,700
Money available per week: £161,009,520
Index score out of 5: 1.54

13. Manchester

A textile manufacturing boom made Manchester the world’s first industrialised city – it’s also the revolutionary place where scientists first split the atom and graphene was produced. Nowadays, as well as its continued involvement in science and engineering, Manchester is known for its media, culture, music scene, and sports.

5-year start-up survival rate: 37.5%
Average weekly pay for full-time workers: £555.90
Average monthly cost to rent a 1-bed city centre apartment: £746.09
Population: 395,515
Number of employed adults: 194,093
Money available per week: £107,896,298.70
Index score out of 5: 1.66

12. Birmingham 

The UK’s so-called ‘second city’ has a long history as a centre for manufacturing and engineering, although the last few decades have seen the services sector take over the local economy. Public administration, health and education are major employers in the city and it’s the third biggest financial centre in the UK. Birmingham also attracts a lot of conference and exhibition trade, thanks to major facilities like the NEC and the ICC.

5-year start-up survival rate: 39.7%
Average weekly pay for full-time workers: £584.10
Average monthly cost to rent a 1-bed city centre apartment: £752.62
Population: 984,333
Number of employed adults: 400,679
Money available per week: £234,036,603.90
Index score out of 5: 1.83

11. Liverpool

Made famous as the birthplace of The Beatles and home of the Merseybeat genre, Liverpool is one of the most visited cities in the UK. Tourism and leisure are big contributors to the city’s economy, as is the services sector. The future looks promising for Liverpool, too, as the economy has been on the up since the mid-1990s.

5-year start-up survival rate: 38%
Average weekly pay for full-time workers: £544.30
Average monthly cost to rent a 1-bed city centre apartment: £656.02
Population: 864,122
Number of employed adults: 182,270
Money available per week: £99,209,561
Index score out of 5: 1.83

10. Edinburgh 

The history and culture of the Scottish capital, as well as the Edinburgh International Festival and the Fringe, have made it the UK’s second most popular city break. Scientific research, higher education, and financial services also account for a significant portion of Edinburgh’s local economy.

5-year start-up survival rate: 42.9%
Average weekly pay for full-time workers: £613.30
Average monthly cost to rent a 1-bed city centre apartment: £763.63
Population: 464,990
Number of employed adults: 272,000
Money available per week: £166,817,600
Index score out of 5: 2.02

9.Coventry 

Car manufacture and ribbon making are what Coventry is historically associated with. These days, although the automotive sector is still a big part of Coventry’s economy, the city has more involvement in areas such as finance, leisure, logistics, research, and the creative industries.

5-year start-up survival rate: 42.2%
Average weekly pay for full-time workers: £595.10
Average monthly cost to rent a 1-bed city centre apartment: £616.07
Population: 359,262
Number of employed adults: 128,764
Money available per week: £76,627,456.40
Index score out of 5: 2.1

8. Leeds 

As well as being one of the UK’s largest legal and financial centres, Leeds has one of the most mixed economies in the UK. Engineering, publishing, chemicals, medical technology, and food and drink are the most major sectors in the city. However, it also has strong retail, leisure, construction, creative, and digital industries.

5-year start-up survival rate: 41.9%
Average weekly pay for full-time workers: £551.90
Average monthly cost to rent a 1-bed city centre apartment: £659.21
Population: 455,123
Number of employed adults: 333,333
Money available per week: £183,966,482.70
Index score out of 5: 2.28

7. Cardiff 

The Welsh capital is a popular destination for visitors, which is why its retail, leisure, and tourism sectors account for a large portion of its economy. Cardiff is also Wales’s main business and financial services centre and it has a thriving media sector.

5-year start-up survival rate: 42%
Average weekly pay for full-time workers: £529.80
Average monthly cost to rent a 1-bed city centre apartment: £694.12
Population: 447,287
Number of employed adults: 147,955
Money available per week: £78,386,559
Index score out of 5: 2.31

6. Stoke on Trent 

Affectionately known as The Potteries, Stoke-on-Trent has a long history as the home of England’s ceramics industry. Although much of the production has moved out of the city, many pottery firms remain. Tours of the factories for these goods help to boost tourism in the city, as does the canal network.

5-year start-up survival rate: 39.3%
Average weekly pay for full-time workers: £497.10
Average monthly cost to rent a 1-bed city centre apartment: £427.78
Population: 372,775
Number of employed adults: 103,269
Money available per week: £51,335,019.90
Index score out of 5: 2.35

5. Bristol 

Creative media, electronics, and aerospace are the main industries that hold up Bristol’s economy. It’s a popular tourist destination, which is likely helped by its artistic and sporting influence. Plus, the government named it a science city in 2005 because of its contribution to innovation.

5-year start-up survival rate: 44.8%
Average weekly pay for full-time workers: £565.70
Average monthly cost to rent a 1-bed city centre apartment: £828.75
Population: 617,280
Number of employed adults: 197,915
Money available per week: £111,960,515.60
Index score out of 5: 2.38

4. Leicester 

Textiles and shoes were the bread and butter of Leicester’s economy in days gone by. Recent years have seen a resurgence in these areas, as some textile manufacturers have moved back to the city. Much of Leicester’s commerce also lies in the engineering, retail, and food and drink sectors.

5-year start-up survival rate: 40.5%
Average weekly pay for full-time workers: £487.90
Average monthly cost to rent a 1-bed city centre apartment: £568.75
Population: 508,916
Number of employed adults: 128,142
Money available per week: £62,520,481.80
Index score out of 5: 2.42

3. Sunderland 

With roots as a trading port, Sunderland is now a strong centre for the services, automotive, science, and technology sectors. Its success is largely helped by Nissan Motor Manufacturing UK, which is the biggest employer in the region.

5-year start-up survival rate: 41.9%
Average weekly pay for full-time workers: £517.20
Average monthly cost to rent a 1-bed city centre apartment: £550
Population: 335,415
Number of employed adults: 116,562
Money available per week: £60,285,866.40
Index score out of 5: 2.46

2. Nottingham 

Historically, Nottingham was known for its bicycle manufacturing and lace-making. These days, it’s home to many major companies, while other businesses could benefit from the Nottingham Enterprise Zone and Creative Quarter. Digital media, life sciences, low-carbon technologies, finance, retail, and leisure are major contributors to Nottingham’s economy.

5-year start-up survival rate: 43.4%
Average weekly pay for full-time workers: £506.40
Average monthly cost to rent a 1-bed city centre apartment: £579.41
Population: 729,977
Number of employed adults: 112,861
Money available per week: £57,152,810.40
Index score out of 5: 2.66

1. Sheffield 

In 2019, Sheffield is the best UK city where you could start a business. The Steel City is known for its rich, industrial heritage. Although steel production has been in decline since the 1980s, Sheffield still develops advanced manufacturing technologies through its two universities and other research organisations. It’s also a major centre for sport and its public sector is a major employer.

5-year start-up survival rate: 44.9%
Average weekly pay for full-time workers: £542.10
Average monthly cost to rent a 1-bed city centre apartment: £585
Population: 685,368
Number of employed adults: 227,822
Money available per week: £123,502,306.20
Index score out of 5: 2.7

Source: London Loves Business

funding small business loan
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Assessing Your Business Funding Options

Whether you’re a start-up, growth stage or established business, there are a number of external funding options available to you. Whether it be a short-term working capital injection, a long term growth agenda that needs financial backing, or a large asset purchase; there may be more funding options than you might think.

Selecting the correct source of finance for your business will require a number of key considerations, depending on your business needs and circumstances;

  • Is it just money that your business requires? Would your business benefit from the additional expertise of an equity investor?
  • How much funding does your business need?
  • Why does your business need the funding? Is this a short term or a long term requirement?
  • How much can you reasonably afford to borrow and what are your preferred payment terms?

Asset Financing

Finance the purchase of new machinery or equipment via an asset finance arrangement, allowing you to spread the cost of the purchase over an agreed time period. Monthly repayments of principal plus interest gives a distinct cash flow advantage to your business. You can also borrow funds against assets which you currently own, where your existing assets may or may not act as direct collateral against the loan value.

Bank Financing

Bank Loans – Commercial bank loans allow your business to borrow a sum of money in return for regular repayments of principal plus interest. You’ll achieve the best interest rates when you’re able to secure the loan against assets within the business. Though, if you are unable to do this, bank loans are still available, just at a slightly higher interest premium.

Invoice Financing – The ability to recover money tied up in outstanding invoices. In return for a percentage of the invoice value, the financer will pay the invoice value upfront. This gives a distinct cash flow advantage as you will not need to wait 30/60/90 days before receiving the cash from customers.

Business Overdrafts – A short term funding option giving you access to extra funds, typically for working capital purposes. Interest rates are based on your ability to repay the overdraft and are typically slightly higher than that of a bank loan.

Crowdfunding

Crowdfunding, whilst not suitable for all businesses, gives the user access to a large pool of would-be investors who may only be able to invest a small amount of money in return for shares in the business. The strength of the crowd means that you can access your required funding amount via a large number of investors.

Angel Investors                                 

Equity financing may be your preferred financing option. Angel investing is a way of private investors investing their own money in return for an equity stake in your business. Like Dragons Den, you may have the option of working with a solo investor or a group of investors. Angels may take an active role in your business and can be a useful source of business knowledge, mentoring and contacts. There are many tax advantages for Angels such as Enterprise Investment Scheme and the Seed Enterprise Investment Scheme. It is worth finding if your business is eligible as this can help attract angels to invest.

Venture capital and private equity

Both venture capitalists and private equity companies will hope to invest in your business, assist in accelerating your growth, and then exit the business having made a profit from the appreciation of the value of the business. Private equity tend to invest in more established businesses, whereas venture capitalists try to identify early stage companies with high-growth potential.

Source: Business News Wales

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Fintech firm urges SMEs to look beyond conventional bank funding

New analysis from ThinCats, the fintech lender to mid-sized small firms, shows that Manchester has a higher proportion of high-growth companies and businesses that are more likely to require funding during 2019 than the UK average.

ThinCats also discovered that businesses in Manchester have been quicker than most regions to look beyond the banks for funding since the financial crisis.

Almost two-thirds (64%) of Manchester-based SME loans were sourced through banks in 2007.

This figure has come down to 53% more recently, slightly below the UK average of 57%.

ThinCats is urging Manchester’s business owners to make sure they consider the increasing number of non-bank lenders when looking for funding in 2019.

Richard Lamb, director regional business development at ThinCats, said: “We analysed more than 200,000 businesses across the UK and found that the likelihood of Manchester businesses needing external funding in 2019 is significantly higher than the UK average.

“This may be to expand their teams, to help service new contracts, or to invest in new equipment.”

He added: “Manchester has proportionately more high growth companies compared to other parts of the UK.

“Unfortunately, these are exactly the types of companies that the high street banks struggle to fund.

“Half of businesses that are declined funding by their banks fail to look elsewhere. It is vital that Manchester’s entrepreneurs don’t give up at this stage.

“We estimate there are about 3,800 businesses in Manchester alone that we could help with funding.”

He said ThinCats has almost £1bn of capital from institutions and other long-term investors waiting to be deployed across the UK.

Further analysis by Thincats claims that Liverpool-based companies have been relatively slow to look beyond the banks for funding since the financial crisis.

It says that 78% of Liverpool-based SME loans were sourced through banks in 2007, and this figure has come down to 57% more recently, in line with the UK average.

Richard Lamb said: “There are around 1,900 SMEs in Liverpool, alone, that we could help with funding.”

Source: The Business Desk

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Alternative finance ‘becoming vital’ for SMEs in north

THE ability for small businesses in Northern Ireland to access alternative forms of finance has become a vital factor in their successful growth, the head of a Belfast accountancy firm insists.

Since the financial crash and credit crunch, the funding void left by traditional lenders has been filled by boutique funders and alternative finance, which can allow SMEs to access finance for a variety of different needs, from long term investment through to funding for short term working capital.

But according to Conor Walls, managing director at Exchange Accountants, the key to small firms securing successful alternative financing is to understand what their requirements are and to know what’s on offer, so that they can secure the best possible deal for their business.

With the continuous improvement in technology and the ever-growing popularity of online banking, banks and building societies have continued to close branches across Northern Ireland, and by the end of 2018 over 43 per cent of bank branches available in 2010 will have shut.

“As a result, businesses have had to adjust to the reality that accessing finance from traditional lenders has become much more difficult, and the ability for SMEs to access finance to grow their business is no longer a simple case of hoping the local bank manager likes the ‘cut of your jib’,” Walls says.

“Businesses can access alternative financing through a range of different forms, but most commonly it is secured via friends and family, peer-to-peer lending, angel investors, venture capital investors, crowd funding, equity finance, invoice financing and asset finance.

“Funders will often have key criteria which must be satisfied before any finance is provided, and borrowers can expect to be required to explain in detail what the growth potential of the business is and how the money is going to be used, as well as showing how they will be able to repay the borrowings and what security the borrowers can offer.”

He added: “The financial world is constantly evolving, and it’s no surprise we’ve seen local businesses embrace alternative finance.

“In recent months we’ve found ourselves working with clients to access alternative finance for a variety of needs, from loans in excess of £100,000 for long term investment through to funding for shorter term working capital requirements”, he added.

Funders will often have key criteria which must be satisfied before any finance is provided, and borrowers can expect to be required to explain in detail what the growth potential of the business is and how the money is going to be used, as well as showing how they will be able to repay the borrowings and what security the borrowers can offer.

Securing alternative finance may appear to be a daunting prospect to the uninitiated, but according to Walls the most important step business owners must take is to educate themselves on the pros and cons of each method of funding and ensure they are as prepared as possible.

He added: “Having a real understanding of what’s on offer is crucial to securing successful alternative financing, and I advise every business owner to ask questions and consider their options.

“We spend a lot of time working with our clients to help them secure the funding that suits their business needs. This ranges from identifying their value proposition, preparing profit and loss and cash flow projections to show funding requirements and, more importantly, the ability to repay any borrowings, through to preparing an application and meeting with a funder on their behalf.

“The key to successfully securing alternative financing is to know what your requirements are and to arm yourself with the knowledge to identify the best possible deal for your business,” he added.

Established in 2011 with officers near Belfast City centre, Exchange Accountants provides a range of accountancy services and tax advice to a wide variety of locally based SMEs and individuals.

The company has developed a specialism in digital and cloud accountancy services and was the first accountancy practice in the north to be recognised as a Gold Partner with market-leading cloud accountancy software provider Xero.

Source: Irish News

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Small-business optimism dips over fears of an economic slowdown

Although tax cuts and regulatory rollbacks this year fueled small-business optimism to hit its highest level in decades , the latest CNBC|SurveyMonkey Small Business Survey, released Monday, reveals that small-business confidence is starting to cool.

After hitting a record high in Q3, the Small Business Confidence index declined from 62 to 59 in the fourth quarter, led by small moves lower in components across the board. This new data from CNBC and SurveyMonkey underscores the idea that while sentiment is at or near record highs, challenges still remain for Main Street.

The CNBC/SurveyMonkey Small Business Survey, conducted from Nov. 19–29, polled more than 2,100 small-business owners.

The dip in the CNBC/SurveyMonkey Small Business Survey comes at a time when the markets are punctuated by bouts of volatility and economic concerns loom over trade tensions and the shortage of skilled workers. The data supports other small declines in metrics, from the National Federation of Independent Business’s monthly read on small-business sentiment in September and October, as well as trends around hiring and labor from Bank of America and Wells Fargo.

“Unemployment is down, small businesses are growing, but there are still some very troubling trends,” said Todd McCracken, president of the National Small Business Association, in an email to CNBC. “The rate of small-business start-ups and small-business hiring continues to lag, one-quarter of small firms still cannot get the financing they need, and few can afford a good health insurance plan.”

He added that “economic security is a huge drive in how small businesses are faring — they’re less likely to invest, grow, innovate and so on if they fear economic problems on the horizon.”

McCracken pointed to polling from the group’s membership, which also saw a decline in economic outlook midyear in 2018.

For the first time in six quarters, sentiment around business conditions also has taken a slight dip, from 58 percent in Q3 to 55 percent in Q4, although that read is still up 11 percentage points year-over-year, according to the survey.

Positive outlook on tax policy waning
Just 34 percent of small-business owners now say that tax-policy changes will have a positive effect for them in the next 12 months, down from a high of 46 percent kicking off the year, indicating some of the positive sentiment surrounding the law may have waned.

Weighing in on the latest results, Laura Wronski, senior research scientist at SurveyMonkey, said, “I would describe it as a slip, not a fall. It’s not a huge drop, and still up year-over-year.”

She added: “Hiring expectations are about the same, but some of the improvements we saw with changes to tax and trade policy were not sustained throughout the course of the year.”

More small-business owners are questioning the positives the administration’s trade policies will have on their bottom lines. Sixteen percent of small-business owners say they expect changes in trade policy will have a positive effect on their businesses in the next 12 months, a new low for the survey. What’s more, 1 in 5 business owners surveyed do business with China, and they were nearly twice as likely as others to expect a negative impact on their business.

 

Skilled-labor shortage still a top concern
On the job market, 18 percent of business owners said they had roles open for at least three months, an increase of 2 percent from Q3 of this year. To help bridge that gap, 56 percent said they were offering higher wages, 31 percent said they were offering to pay for additional training and 27 percent said they were offering additional benefits to workers. Others said they were offering to help pay for student loans and even relaxing policies around things like drug testing and criminal records.

“I think it’s very interesting that even small-business owners are having to juice their offers a bit because it is a tight hiring market,” Wronksi said. “It’s great for workers but tough on small-business owners.”

Finding skilled labor has also come up as a top issue in the National Federation of Independent Business’ monthly survey, outpacing other major issues, like taxes and government red tape and regulations for more than half of the year in 2018, a trend that could continue into the next year.

Source: Yahoo Finance UK

Marketing No Comments

UK SME business confidence down almost 20 per cent on 2017

Research commissioned by Dun & Bradstreet revealed UK small and medium-sized enterprise (SME) confidence in future financial success is down 19% compared to last year. The study found that almost a third (32%) of respondents have considered leaving the UK to increase their chances of success.

As well as ongoing uncertainty over Brexit impacting growth, the research also shows that late payments have risen in the past year. Cash flow remains a critical issue, with the average amount owed to SMEs at any one time over the past 12 months now at £80,141 – an increase of nearly 25% from 2017. The consequences of these late payments include cash flow difficulties (31%), delayed payments to suppliers (28%) and reduced profit performance (22%). Nearly two thirds of respondents (63%) feel that there should be financial penalties in place to tackle late payments and 62% believe there should be legislation in place to mitigate the problem.

Other factors cited as impacting the future financial success of SMEs include recruitment of the right talent and resources (35%), adoption of new technology (26%) and ability to deal with increased regulation such as the GDPR (20%). Operating in an uncertain business environment has had a clear impact on SME business plans, with 63% of respondents saying they had a clear business strategy in place, down from 70% in 2017.

“Given the changing political, regulatory and economic landscape, it’s unsurprising that small business confidence is down,” said Tim Vine, Head of European Trade Credit at Dun & Bradstreet.  “There’s no doubt the months ahead will continue to be challenging as we move towards the Brexit deadline. Small business leaders are having to contend with scenario planning on top of dealing with day to day priorities such as cash flow management, late payments and securing finance for future growth.

“Despite the range of factors at play, positively, over half of the businesses we spoke to were confident that their business can achieve financial growth over the next five years. The resilience of SMEs will stand them in very good stead through these changing and complex times.”

Source: London Loves Business

Brexit
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How Invoice Finance could drive the UK economy following a no-deal Brexit

With the details of Theresa May’s recent Brexit deal pushing cabinet members to resign, and a seemingly long road ahead before a draft deal is passed by the UK parliament, a no-deal Brexit is becoming more than just a worst-case scenario.

Small-to-medium-sized businesses are making more conscious efforts to put serious contingency plans into place, as a result.

A CBI survey on Brexit preparedness this year stated that more than 50% of businesses had examined different Brexit scenarios, and more than 60% had begun developing contingency plans in the event of no deal.

However, findings from the same survey showed that 77% of businesses said the number of potential scenarios made planning for Brexit challenging. Amid all the uncertainty, the question remains, what can SMEs do to keep a strong economy post-Brexit?

A study published this year by Equiniti could have highlighted Invoice Finance as the answer. The report demonstrated a close correlation between the level of business borrowing and rising Gross Domestic Product (GDP); connecting the two makes a strong case for Invoice Finance being an optimal way to fund business growth in the wake of a cliff-edge Brexit.

Understanding the threats

So what happens if we depart from the European Union with no concrete agreement? Where does that leave the small business owners of Britain?

One of the biggest talking points surrounding life post-Brexit falls on the dissolution of a transition period. Without a deal in place before exiting the EU, we would need to revert to trade on the basis of World Trade Organisation rules in a matter of days, meaning businesses would need to be ready to react to the changes, and fast.

CBI data shows 48% of businesses that had completed scenario planning found the main difficulties related to the costs incurred for internal resources or for hiring external help.

With no implementation period, increasing costs attached to simple business essentials, additional tariffs and the anticipated fall in sterling, SME survival could be in real jeopardy.

Numerous organisations including the Centre for Economic Performance at the LSE and the OECD have raised concerns that the WTO scenario may reduce UK GDP by up to 10% or more, which could result in company earnings and stock prices reducing with it.

These unfavourable outcomes could act as deterrents to potential investors looking for investment opportunities, placing further pressure on the types of funding available for SMEs.

To survive a no-deal Brexit, UK SMEs will need to find quick and accessible ways to acquire and maintain healthy cashflows, source new suppliers, and access funding facilities that grow in line with their business to help pay unexpected tariffs, charges and taxes.

However, searching for the best most relevant methods of financing and investment will be difficult in the current climate, leading many to query which kind of financial backing is the most viable for SMEs post-Brexit?

Connecting the dots

There are a small number of financing options that allow SMEs to borrow large sums of money without having equally large minimum turnover requirements.

There are even fewer that also provide flexibility, competitive prices and the kind of quick turnaround decisions that will be necessary to keep the economy afloat post-Brexit.

One of the main sources of funding that adheres to all the above is Invoice Financing, and it is this option that may well hold the key to the betterment of the UK economy.

Invoice Finance is a way for businesses to borrow money against the outstanding amounts due from their customers. Businesses pay a small percentage of the invoice amount to the lender as a borrowing fee which allows business owners the financial flexibility to access working capital.

Findings from the Asset Based Finance Association (now known as UK Finance) show that Invoice Finance is already popular amongst SME’s, with the amount advanced to the UK’s smallest businesses jumping over 60% within just a year. The goal here will be for SMEs to continue this pattern after Brexit decisions have been made.

With small and medium enterprises totalling 99.3% of all UK private sector businesses, the loss of capital from this sector could stifle business growth and impact the overall strength of the British economy.

To stop this from happening, small-to-medium sized businesses need to continue growing and thriving, with strategic lending solutions such as Invoice Financing acting as a brilliant way to adapt confidently after Brexit has passed.

Source: Asset Finance International