SMEs are becoming increasingly pessimistic about their long-term future, according to a recent report by an associate professor of enterprise from Warwick Business School.
Francis Greene’s research discovered that more than 25% of small firms expect to have closed down by 2014. Furthermore, one in six small business owners do not expect to survive until the end of this year. 37% of micro-businesses said it has been harder to fund their firm over the last year and 19% said their primary bank account does not even have a credit balance.
An overwhelming number of small business owners said they do not intend asking their bank for a loan this year. 50% of micro-businesses rely totally on their personal finances to keep their business afloat. Of those, one in four funds their cash flow from their credit card and another 17% take advantage of their personal overdraft.
Mr Greene said that the UK’s micro-businesses form the backbone of the country’s economy and yet they face a multitude of challenges if they want to survive the turbulent economic climate. In order to provide them with effective support, we have to understand exactly what they need.
His report calls for better promotion of business advice services so that micro-businesses know where they can access support. He also offers them some practical advice into managing their cash flow. Greene advises micro-businesses to make use of credit referencing agencies to ensure customers are creditworthy, invoicing on the day a chargeable event occurs and charging customers interest if they do not settle invoices on time.
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