small business
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How Can Young People Make It As Entrepreneurs In Today’s Economic Climate?

Starting a business on your own has never been an easy path to follow, but for those who take the plunge, it can be a rewarding one. No matter what your first entrepreneurial project is, support is always necessary, whether that’s your family helping you to pack your first shipment or financial assistance from government schemes.

Making your way in business continues to be difficult in the wake of recent global events and given the difficult economic landscape young entrepreneurs are faced with today, you could argue that the hill to climb is steeper than ever. Those odds can seem even slimmer when almost 60% of small businesses fail in their first three years of life. While there are barriers, there are also ways for young people to find the support they need and overcome those hurdles to enjoy business success.

The power of social media

Social media is one of the great levellers for businesses around the world. While funding issues and skills gaps are hurdles to overcome, when marketing online, you find yourself with the same opportunities as large corporations through social media. Companies that can generate a huge following through original content can then translate that presence into sales.

For example, the parkour brand STORROR gained a following of millions through its YouTube videos before successfully segueing into the world of parkour clothing. Or take the Dollar Shave Club, which began with a viral video in 2012 that acted as the launchpad for the company’s continued success.

Financial business support for young people

Starting a business requires investment, be that from your own wealth, that of your family, or from investors and banks. But most young people haven’t had the time to build up significant investment funds so they need to come from somewhere else. Fortunately, there are several avenues for young entrepreneurs to pursue when seeking funding support for their businesses.

Small business loans

Small business loans from the bank are typically between £1,000 and £50,000 and should provide enough capital to start most entrepreneurial ventures. But you will need to present your case well to the bank as they need to be convinced that you are a sound investment. Similarly, young entrepreneurs can seek help from the government with a Start Up Loan that ranges from £500 to £25,000.

You must create a business plan that is complete with facts, figures, and projections so you must do your homework and thorough market research for a successful loan application. Outlining in detail how you will use the investment and what your strategy will be are also important to put forward to earn the trust of bank loan managers.

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Crowdfunding

The benefit of crowdfunding investment is that you already have interested parties in your products, services, and brand before you kick things off. This process allows entrepreneurs to raise funds for their business online by offering a small stake in the company. It is similar to selling shares and some companies have raised millions of pounds through micro-investments.

Small business grants

Government grants are available for startups to help cover the costs of buying equipment, premises, and other essential infrastructure. These can be tricky to apply for as each grant provider is looking for different things, and you don’t want to waste precious resources trying to obtain a grant that you aren’t eligible for.

You may also be eligible for green business grants that aim to help companies become more sustainable and environmentally friendly. This can help with installing LED lights, insulation, more efficient heating, or alternative energy sources.

Improving your skills

To run a business well you not only need to have the technical expertise for your chosen field but you also need to understand the finances involved, how to manage people and supply chains, and keen problem-solving skills. You may wish to figure things out as you go but it can be helpful to give yourself a sound foundation in some of the skills you will need for success.

Consider entering a mentorship program to have someone with experience take you under their wing or try youth entrepreneurship schemes that aim to improve and develop your business leadership skills. For example, Youth Business International equips disadvantaged young people to help them build the skills, confidence, and connections they need to beat the odds and become successful business owners.

Digital skills for social mobility

Given the range of barriers along the way, such as poverty and social inequality, social mobility in the UK is difficult for many to achieve. But technology is providing a springboard for social mobility as the demand for digital skills continues to rise. From cybersecurity services to digital marketing and content creation, there are a host of startup ventures that young entrepreneurs can embark on that leave traditional business models in the past.

Source: Shout Out UK

SMEs
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Festive cheer: SMEs to reward employees with 120 million extra days off

Small and medium-sized businesses are set to reward their employees with 120 million extra days off as the cost-of-living crisis bites.

More than half a million UK small and medium-sized enterprises (SMEs) are spreading festive cheer among their workforces by giving the gift of time, according to the latest quarterly SME barometer from Barclays. One in ten SMEs said they would be gifting each employee 2.5 extra days leave, on average, meaning that workers across the country will receive 120,345,602 days off cumulatively, the bank said.

People working in the hospitality and leisure, and manufacturing sectors will get even more time off, with 3.5 days and three days of additional holidays, respectively. The Barclays research found that 41 per cent of SME employers believe staff activities leading up to the festive season contribute to employee retention. Similarly, nearly a third (30 per cent) of Scottish employees say they are less likely to look for another job if their employer organises activities to reward staff over the festive period.

Of employers who are seeing an increase in demand for benefits from new employees, more annual leave is one of the top three benefits being requested by existing employees. In addition to providing time off, about two fifths (44 per cent) of SMEs will be hosting end-of-year parties, spending an average of £56 per head on festivities, while 41 per cent will be closing offices between Christmas and New Year and 25 per cent will be awarding Christmas bonuses.

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According to the latest barometer, more than half (55 per cent) of UK SMEs reported their total revenue grew – with turnover up around 9.1 per cent year-on-year, on average. Some 51 per cent of UK SMEs reported turnover growth in the third quarter of 2022 compared with the second quarter, consistent with data from Barclaycard Payments, which showed a modest increase of 5.2 per cent in the value and 4.4 per cent in the volume of payments made to Scottish SMEs between July and September this year.

Festive cheer and optimism are, however, dampened by the cost-of-living crunch as nearly half (47 per cent) of UK businesses are worried about their prospects heading into the new year. Some 68 per cent of firms are concerned about the negative impact that rising energy bills will have on their business, with 26 per cent feeling very concerned. Larger businesses are feeling the pinch too, with nearly two-thirds (59 per cent) predicting a decrease in consumer spending and 41 per cent worrying about their businesses prospects as they approach 2023.

Colin O’Flaherty, head of SME at Barclaycard Payments, said: “The upcoming festive period will be our first since the pandemic without restrictions, with employers and employees looking to make the most of it. While it’s been yet another challenging year for businesses, many SMEs are looking to inject some festive cheer by rewarding their employees, as business owners are aware of the positive impact that employee morale can have on staff retention. Our research shows that although owners are very aware of the difficulties to come, they remain resilient in the face of rising costs.”

By Scott Reid

Source: The Scotsman

late payments
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Retail the only SME business sector to decline in past year, research shows

Retail was the only small business sector in the UK to record a fall in sales in the year to October. According to Xero’s Small Business Index, based on anonymised and aggregated data from hundreds of thousands of small businesses, showed that UK retailers experienced a 5.1% drop in sales in October.

While sales among the broader small business economy rose by 4.6% year-on-year (y/y), following a 7% rise in September. This shows the stark situation for independent retailers as they enter their busiest time of year.

Despite the sales rise amongst small businesses as a whole, once adjusted for current high inflation – using the ONS Consumer Price Index (CPIH) of 9.6% for October – sales actually fell 5% YoY. That is, the rise in national sales was due to price increases rather than small businesses selling more goods and services.

The struggles of small retailers are further evidenced by a 6.6% YoY decline in the number of people being employed in the sector, while wages rose 4.7% YoY in October. This suggests that retailers are offering higher salaries to attract staff ahead of the festive season.

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Alex von Schirmeister, UK Managing Director, Xero, explains: “As the festive shopping period kicks off, independent retailers need our support more than ever before. They don’t have the large marketing budgets to promote Black Friday deals. Last week’s Autumn Statement offered little respite, so these hard-working businesses will be feeling the pressure to make up the current sales shortfall and manage recruitment challenges. We’re calling for immediate action from policymakers to ease the burden and provide some much-needed stability.”

XSBI data for October also revealed that small businesses in the North of England are struggling. The regions that saw the largest declines in jobs were Yorkshire & the Humber (-7.7% YoY), West Midlands (-7.6% YoY), East Midlands (-7.3% YoY) and the North-West of England (-6.7% YoY).

This pattern is similar when it comes to sales. London experienced the strongest growth (+7.3% YoY), while Scotland (+3.1% YoY), East Midlands (+3.5% YoY), West Midlands (+3.9% YoY) and Yorkshire & the Humber (+4.6% YoY) experienced the lowest sales growth.

Meanwhile, the length of time small businesses wait to be paid rose by 0.6 days to 30.5 days in October. This is the sixth increase in payment times in the past seven months.

On average, late payments to small businesses by their customers increased again by 1 day, up to 8.3 days. Payments are the latest they have been since August 2020. Waiting longer to be paid puts additional stress on small business owners as they navigate their own rising bills.

Government called on to act

Last week, Xero unveiled a new report at the House of Lords that outlines a four-point plan to support small business recovery, including policy recommendations for the UK Government. This included:

• Building a growth strategy for small businesses, with government asked to act to create policy that has SMEs at its heart;

• Getting government to tackle late payments with a range of measures from introducing e-invoicing to regulating payment times;

• Promote the use of accountants and bookkeepers in helping run businesses, while also pushing more students to move to accountancy to avoid a future dearth;

• More investment in digital skills, tech and infrastructure, as well as reducing the tax burden on training and reskilling.

By Paul Skeldon

Source: Internet Retailing

small business
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Keeping it in the family? SMEs divided on working with relatives

SME owners are split on whether to keep their businesses as a family affair or not, according to new research by small business lender iwoca. Just two in five (41%) SME owners say they would give a job to a family member if they asked – by contrast, nearly one in three (30%) said they would not employ a relative.

This split reflects current small business arrangements – just over half (54%) of small business owners say they do not work with family in any capacity. Of those who do work with family, one in four (26%) small business owners works with their partner and one in twelve (8%) works with their child.

Steptoe and Son or Succession?

Those who choose not to work with family are clear on why: two in five (39%) small business owners report wanting to keep family and business life separate. One in ten (11%) say they want their family to forge their own path – indeed, more than a third (35%) of SME owners surveyed say it is unlikely that their children would join their business. Interestingly, a tenth (10%) believe their relatives can find a better career outside of their industry.

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Improving family bonds

Despite a minority of SME owners employing relatives, those who do work with family members see it as a positive. Almost two thirds (64%) of SMEs report that working with their relatives had a positive impact upon their relationships, with only a small fraction (7%) of SME owners reporting a negative impact.

Those small business owners who do work with their family cite trust as a significant positive, with a quarter (25%) saying that they trust family members to do a better job than a stranger.

Seema Desai, COO at iwoca added: “For some, working with family members could be one of the best decisions they ever make, but, of course, it won’t work for all. Try to make an objective assessment about what your family member can add that is currently lacking in your business, and whether you could both maintain the right guardrails to protect both your professional relationship and your personal one. Clear roles and responsibilities will be crucial as you look to grow and build a successful venture in the future together.”

Lottie Whyte is co-founder and CEO of MyoMaster, which she set up with her husband, Joe. She says: “I co-founded a business with my husband Joe three years ago, and for the most part it works incredibly well. There are three key reasons for this, the first is commitment – the work is all consuming and if I’d been married to someone who wasn’t in the business with me I’m pretty sure I’d be divorced by now! The second, trust, is vital and it’s great being able to start with a foundation already so strong. And finally, speed – being able to skip the pleasantries and communicate efficiently has been crucial.

“There can be drawbacks of course, from never being able to switch off from work and the constant pressure to build our global business can sometimes spill over into our personal relationship in a negative way. But overall, my husband and I already have a long history of working well together, from organising our three day wedding to managing house renovations – we know how the other one works.”

UK startups
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The UK’s small businesses need mentors to navigate the tough times ahead and boost growth

Emma Jones CBE is the founder and chief executive of small business network and business support provider Enterprise Nation.

As we head into the most challenging macroeconomic environment for decades, the UK’s small business community will need careful guidance.

Navigating unimaginable scenarios has become second nature to the nation’s entrepreneurs for all the wrong reasons.

While you might think political ups and downs create that illusive quality ‘resilience’, what has actually happened is that too many founders have simply frozen their plans, like rabbits in the headlights.

If we are going to see growth, we must urgently focus on turning this around. Small businesses are crying out for a fresh approach and a new business action plan that will stand up to whatever the next few years are going to throw at them.

It’s no surprise then, that a recent report has uncovered a ‘pent up’ demand for mentoring in the UK right now.

Mentoring Matters launched today on National Mentoring Day, found that the nation’s appetite for mentoring is on the rise. Today, 82 per cent of businesses are interested in mentoring.

Two thirds (61%) of the 823 small business founders surveyed said that mentoring’s reputation among their peers and business colleagues had increased, with younger founders seeing fewer barriers to being mentored than older entrepreneurs, suggesting there is also a growing role for mentoring to play in the future.

The benefits of mentoring are obvious to most people who have had a mentoring relationship. The survey found 66 per cent of businesses that had received mentoring felt it had helped them survive and three quarters (76%) said it had been key to business growth.

But the report also found too many leaders amongst the country’s 5.5 million small and medium-sized businesses are yet to take part, despite a willing army of potential mentors waiting in the wings.

Put off by time pressures and a perception of an unachievable schedule of long meetings over dusty desks, entrepreneurs have been facing the increasing economic pressures alone for too long.

While taking time out of the business can be challenging, those that are working with a mentor tell us they are finding a way – they are making it work at a frequency and in a manner that suits both the mentor and mentee.

A friendly face on a Zoom after dropping the kids to school is a great way to start the day or a quick call with someone who has ‘been there and done it’ on the commute ahead of a key meeting, really helps to clarify strategy and cement goals.

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The reality is that the experience and wisdom that mentors can bring has never had greater value to our economy as we dive into a new era of book balancing politics under Rishi Sunak.

With a willing army of mentors waiting to be mobilised, we must break down the barriers to ensure more entrepreneurs can access this resource to navigate the tough times ahead.

Mentoring has a very clear role to play in improving business performance and supporting growth. As a founder of a growing company myself, I’ve benefited from having a mentor over the past decade. When there are so many questions to address each day – about product, people, finances and growth – it’s vital to have a sounding board; someone with experience who can hear you out as you navigate the entrepreneurial journey.

Younger entrepreneurs see fewer barriers to being mentored. The under 40s see it as much more achievable than their older colleagues. The report suggested only 38 per cent of businesses founded by the under 40s said cost is a barrier to seeking a mentor, compared to 58 per cent of the over 40s. Half (52 per cent) of the over 40s claimed a lack of time as a barrier, compared to just 40% of under 40s.

Removing these barriers is, at least partly, about addressing perceptions. The report found the financial cost of participation was more frequently cited than any other barrier (51 per cent) – yet most (70 per cent) of the mentoring that respondents received was actually free.

A lack of relevance was also a popular barrier (cited by 45 per cent) but platforms to match mentees to mentors with relevant knowledge of their sector and business issues do exist, for example the support offered to firms on the Help to Grow: Management course.

The report found ethnic minority respondents to the survey saw less barriers to being mentored than their white British counterparts. Only 39 per cent of saw cost as a barrier, and 36% said it was a lack of time that stopped them seeking a mentor. The same figures for white British respondents were 57 per cent and 54 per cent respectively.

Another 38 per cent of ethnic minority respondents said that a perception of mentoring not being relevant to their business is a barrier, compared to 48 per cent of white British respondents, suggesting firms founded by minorities are more open to this kind of support.

The good news is the growing demand is matched with a growing willingness to become a mentor. The report found 83 per cent of business leaders polled were up for it. Now we just need them to get involved and sign up.

They could easily do that via Enterprise Nation and get training from the Association of Business Mentors as part of the Government’s Help to Grow: Management Course, a flagship programme launched by Rishi Sunak last year.

By Emma Jones

Source: This is Money

small businesses
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Sustainability a high priority for small businesses, but they urgently need more support

A huge opportunity exists to support small businesses to become more sustainable as they face mounting economic challenges, according to a new report from Oxford Brookes Business School and Small Business Britain.

In findings that point to the ambition amongst small firms to take action on climate change, 71% of small businesses said they intend to reduce their carbon emissions over the next two years, but many feel that barriers such as lack of finance (41%) and time pressures (30%) are holding them back.

The research, which was gathered earlier this year, shows that over two thirds (69%) of British small firms were already actively lowering their carbon emissions and over half (56%) were taking action to optimise energy usage and reduce waste in their business.

Experts behind the report believe that escalating energy prices and growing economic uncertainty is likely to have strengthened this desire among small businesses. They call for greater support and collaboration to guide small businesses on the journey towards net zero, which would not only have positive impact on the environment, but open up growth opportunities and help insulate small firms from further economic shocks and uncertainty.

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“The challenge of climate change looms large, and the conversation around business sustainability is only going to get bigger and more critical. This is going to increasingly be the focus for all business as we continue through 2023 into the next decade and beyond,” said Michelle Ovens CBE, founder of Small Business Britain.

“Entrepreneurs are natural changemakers, and they have the ability to make real impact quickly. With 99% of the UK economy made up by small businesses, they play a vital role in helping the UK achieve net zero. This passion needs to be supported and directed, however, to ensure that it converts to action that has impact.”

Despite clear intentions from entrepreneurs to incorporate sustainability into their business, 41% feel that access to finance is holding them back and almost a third (30%), do not feel they have the time to prioritise green switches. Furthermore, over half (54%) either do not understand or are not aware of the government’s net zero commitments.

To help address this, Small Business Britain launched the Small Business Sustainability Basics Programme earlier this year, in partnership with Oxford Brookes Business School. This is a free six-week course designed to help firms kickstart their sustainability journey, which has now been completed by over 1300 small firms across the country.

“Small businesses play a big role in achieving our Net Zero targets, so it’s incredibly encouraging that our research shows many are already taking action or want to do more,” said Dr Lauren Tuckerman, Senior Lecturer at Oxford Brookes Business School and co-author of the report Small Business Sustainability: Insights and Implications.

“In this report, there are not only recommendations for small businesses, but also for policymakers, intermediary organisations and bigger businesses too, so that we can all work together to achieve our sustainability goals. Sustainability is not a cherry on the top of a good business, it is the strong foundation for them to thrive, and small businesses are ideally placed to show that.”

Source: Ealing Times

SMEs
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Graduates accelerate SME growth across the North East

Graduates are our future business leaders.

They play an important role in supporting the health and growth of our regional economy-encouraging them to stay in the region is vital to both.

The University of Sunderland has an excellent track record in delivering programmes of support with graduate employability and retention in the region at their heart.

One such pioneering scheme is the Graduate Internship Scheme. First launched in 2011, the University of Sunderland received European Regional Development Funding (ERDF) to run its Graduate Internship Scheme, connecting graduate talent with regional, Small to Medium Enterprises. It has since provided over 650 graduates the opportunity to work in a variety of small-to-medium private sector organisations across the north-east and delivered nearly £2.4 million in funding to those businesses.

By Autumn 2022, the internship scheme will have placed 250 graduates into full-time roles within growing SMEs, earning an average salary of £20,000.

Graduates typically bring fresh ideas into those organisations, as well as a new perspective, and often help deliver a new product, process or service for the business. After 12 months, employers can decide whether to extend the intern’s contract, and most do, with a high rate of graduates being offered full-time employment on completion of their internship.

Project manager Laura Foster says: “It’s been a well-documented difficult and uncertain time for businesses over the last couple of years, and our project helps SMEs in a really practical way with help towards graduate’s salary costs”.

There are many success stories to have come out of the project and the internships team regularly receives positive feedback from SMEs and graduates who have benefited. One such example is Blaydon-based HLF Group. They recently recruited BA (Hons) Graphic Design Graduate, Brooke Gerrens.

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Director Rachel Conroy said, ‘Brooke’s appointment has had a hugely positive impact on our business. Previously we outsourced a lot of this work (Graphic Design and Media Management) which took time, and they didn’t know our products as well. I believe we can clearly demonstrate we have grown the business through the work Brooke has produced’.

‘The future is very bright. We have three very large tenders going through at the moment with multi -national companies to refurb their stock across the country. We are also seeing steady growth into new trade sectors.’

Brooke told us of her internship experience so far, ’I have always had a creative eye, in particular editorial design which feeds into designing brochures for customers, therefore the job fits into everything I have wanted to do.

The atmosphere working at HLF is fantastic, design is something I have always had a passion for, so to have the opportunity to be creative in my career is great.’

The scheme delivers European Regional Development Funding (ERDF) and supports SMEs with the cost of employing a graduate, providing up to £3,500 in subsidy payments. After 12 months, employers can decide whether to extend the Intern’s contract.

Source: Bdaily News

UK startups
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SMEs reap benefits of digitalisation cause by Covid-19

The Covid-19 pandemic made online purchases increase and drove customers to use different channels to find products and services. For the UK’s small and medium-sized businesses, this meant having to implement new digital strategies to grow their online presence, while competing with the bigger fish on the market.

Capterra UK conducted two surveys on nearly 300 professionals from SMEs to find out how companies have developed their digital presence since the pandemic, and what digital investment plans are in the pipeline.

According to the first survey, one in five businesses (23%) did not have a digital strategy before Covid-19 but had to define and implement one as a result of the pandemic. For more than half of companies, Covid-19 accelerated their digital transformation processes because their initial digital strategies were not sufficient.

Covid-19 accelerated digital strategies, but most SMEs say it was worth it
Despite challenges brought on by the pandemic, the majority (56%) of the surveyed respondents thought that their company would have been worse off or even not exist today had they not carried through with digital initiatives. That said, nearly two-thirds (64%) of respondents found it extremely or somewhat difficult for their company to implement its digital strategy.

In fact, a combined total of 55% said they recruited new employees (36% hired more people and 19% hired and fired staff) to help them carry out the digital migration, with 58% identifying Digital Marketing Specialists as the top recruited role. However, while some have new recruits, 19% of SMEs still have somebody in charge of digital strategies who is not an expert in the field.

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Omnichannel strategies are being used to meet customer demands
According to 38% of the respondents, the top reason for the companies’ digital transformation was to respond to customer demands, with over half (51%) saying customer service support tools, including customer relationship management (CRM) and chatbots, are focal points that needed improving.

In particular, with more people working from home and using multiple devices, Covid-19 accelerated the deployment of omnichannel strategies to cater to users: While 31% of businesses had these strategies in place before Covid-19, the number rose to 37% during the pandemic.

SMEs’ investment in Email Marketing and Data Collection will be key to success
Capterra UK’s second survey shows that while many businesses invested in digital strategies to adjust to the changes brought upon by the pandemic, most UK SMEs will maintain (46%) or increase (50%) these investments for at least the next two years, with 55% saying the strategy is working well and that more investment means more revenue.

According to 35% of the respondents, the main reason new digital strategies help businesses is that it increases sales opportunities by reaching new people from different channels. It is therefore no surprise that for 91% of businesses, email marketing is an important element of their digital strategies (39% say it is somewhat important and 52% say it is very important), followed by Data Collection (90%).

Big companies are competition for SMEs but are also beneficial
Nearly three-quarters (72%) of the surveyed professionals somewhat or strongly agreed that “big companies are more favoured than SMEs in the digital age”, which may explain why a quarter (26%) of respondents said their company adopted a digital strategy to keep up with competitors.

Although this may be the case, others are leveraging the benefits: The results show that 15% of SMEs see the existence of big companies as beneficial to their company, with 42% of this group saying that they observe and learn from the way big companies work.

By Alice Cumming

Source: Business Lender

SMEs
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SMEs now twice as big

The definition of an SME – a small and medium sized enterprises – has officially changed.

As of today, 3rd October 2022, any company with fewer than 500 employees is classed as an SME and therefore exempt from certain bureaucracy.

The maximum size of a small business remains 49 employees but for a medium sized business it has been raised from 249 to 499 employees.

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The former definition was in line with EU definitions. The motive for changing the definition is to free up more companies from ‘the burden of regulation’.

Ministers do not yet know what the impact will be but hope to be able to go further. Once the impact on the current extension is known. “The government will also look at plans to consult in the future on potentially extending the threshold to businesses with 1000 employees, once the impact on the current extension is known,” it said.

Source: The Construction Index

Business
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More than half of SMEs in UK still struggling post-COVID

New research has revealed that over half of respondent SMEs (56%) are still struggling to stay afloat, two years on from the start of the pandemic. Earlier this year, B2B BNPL provider Hokodo surveyed 500 SMEs across a number of industries to gain a better understanding of how such businesses were recovering from the pandemic, and the results were startling.

The hospitality and tourism industry has been impacted the worst, with 77% of businesses still negatively affected. This news comes amid the cost of living crisis, with energy prices and inflation soaring.

More than two years on from the start of the pandemic, 28% of small business owners admit they are barely breaking even. Meanwhile, a further 48% said that their business is now making revenue, but the financial state of their business has been difficult to manage. During the last six months, 28% have had some difficulties making payments or missed paying invoices from time to time. For 8% of respondents, missed payments have become a regular occurrence.

With around half (56%) of SME owners feeling somewhat positive about the future of their business in the next 12 months, there is some good news to be found in the survey results, but SMEs are still facing significant challenges, with business owners worrying about a number of issues.

  • By far the greatest concern for SME business owners is increasing energy prices, which is currently worrying 49% of respondents.
  • Inflation rates are an issue for 43% of business owners.
  • Cash flow is causing problems for more than a third (39%) of SMEs – over 90% of whom had no cash flow concerns pre-pandemic. A quarter says that cash flow is no longer a problem, but it used to be during the COVID-19 lockdowns.
  • Material costs are affecting 32% of respondents while labour costs are a struggle for 16% of businesses.

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One of the ways that SMEs can alleviate cash flow problems is by having the option to delay payment of their business purchases. 23% of survey respondents admitted that access to longer payment terms is crucial to their company’s survival over the coming 12 months. Meanwhile, 41% actively search for suppliers who offer credit terms, and 15% say that this is an essential requirement when sourcing suppliers.

Perhaps adding to the financial strain is the fact that 45% of businesses occasionally have to grant their own customer payment terms in order to win deals, while 14% have to do this all the time, raising the question of why there has not been more provision made to support the B2B sector in this area.

Richard Thornton, co-founder & co-CEO of Hokodo, comments: “It’s no secret that the last few years have been difficult for businesses globally. But while there is a common perception that the concerns of the pandemic are largely over, it’s important to remember that many SMEs are yet to re-establish their equilibrium.

“With the increasing cost of living, inflation, and pressures of the energy price crisis – something that has been shown to significantly impact hospitality providers – SMEs are in need of greater support. Finding ways to better manage cash flow is at the heart of this, and contemporary trade credit solutions have the potential to provide the answer.”

Source: SME WEB