New research suggests that a worrying number of British businesses fear that they would face closure within less than a year if their venture encountered a ‘critical event’ – such as the unexpected death of a key employee.
The research, which was carried out by insurance company Legal & General, also found that around 65 per cent of UK small and medium-sized enterprises (SMEs) are currently struggling with business debt – an increase of 33 per cent over figures recorded in 2011.
Legal & General’s report, entitled State of the Nation’s SMEs, revealed that an increasing number of businesses are turning towards borrowing in order to get by. During the period studied, it found that the average SME borrowed around £176,000.
Researchers discovered that 19 per cent of respondents had borrowed £50,000 or more on a credit card to cover their costs, while a further 19 per cent of business owners said that they had been forced to take out a personal loan in order to prop up their business.
Furthermore, 67 per cent of business owners said that they feared closure, should a ‘critical event’ hit their business – while 73 per cent believed that the death or illness of a key employee would push their enterprise over the edge within one year or less.
The news comes at a time when economic and political uncertainties are weighing heavily on the minds of many British business owners, as separate studies have previously revealed.
Research carried out by the Federation of Small Businesses (FSB) recently found that eight per cent of SMEs would consider closing down if Brexit had a negative impact on their ability to access EU talent.
When a business is affected by economic uncertainty, it is better to address financial concerns early on, rather than allowing the problem to escalate. At Haslers, we are able to explore the best options for your individual circumstances. To find out more about our services, please contact us.