Are Small Businesses on the Brink of Going Bust?
It is also the fourth quarter in a row where closures exceed creations. In part, though, this may be explained by the dramatic rise in the launch of new businesses in the last two years. In 2021, 810,316 new companies were launched, an increase of 21.8% compared to 2019. It was the highest number of launches on record.
These worries, stemming from a variety of reasons, include fears of rising inflation - factory input prices have increased by 18.6% over the last year, a record rise. Other worries include supply chain issues and difficulties finding staff. All these are causing 62% of business owners to have sleepless nights and 33% to feel alone and isolated.
According to the PayPal report, one way business owners are trying to keep their businesses going is by regularly working at weekends (44%), and more than a third (36%) will go at least six months before taking a holiday or time off, if at all.
ONS statistics bear out these worries. They suggest that 40%, some 2m businesses, had less than three months’ worth of cash, with the consequent potential risks to these businesses and employees. Of these 2m, the Federation of Small Businesses estimated that about 10%, or some 200k, were in serious trouble. Another 300k have potentially only a few weeks of cash left before they go bust.
Financial woes and stress can hurt health and wellness. In tough times, staying on top of their financial wellness is a vital tool for small business owners. It needs to be a priority to minimise the personal impact of running a business, which can be an isolating and challenging experience for entrepreneurs.
Ben Ramsden, Head of SMEs, PayPal UK