Money worries that keep SME owners awake at night

Most small business owners – as many as three quarters – are experiencing sleepless nights with market volatility being their top concern for the second consecutive year. With a third expressing worry about this in Q1, the figure has slightly decreased from the peak of the same period in 2022, amidst market turmoil following the mini-budget. But it remains roughly double the level from eight years ago.

Despite inflation rates remaining at four per cent in February, the effects of rates peaking at 11.1 per cent in the previous 18 months have continued to profoundly affect the outlook for them.

Data from Novuna Business Finance showed that, along with general economic volatility, the proportion losing sleep over interest rates in particular has significantly increased over the past eight years, rising from 16 to 21 per cent.

Perhaps unsurprisingly, given these circumstances, the proportion of businesses struggling to manage their cash flow has increased over the year, from 19 to 21 per cent, making it one of the top three issues this year. Worries about retaining business remain high, with a very slight increase from last year).

Sector-specific differences have revealed distinct challenges faced by businesses across industries. Construction and real estate businesses were the most concerned this quarter, with 84 and 87 per cent respectively reporting major worries—the highest since records began in 2015. Market volatility is a key issue for businesses in the hospitality and retail sectors.

Interestingly, while concerns about the impact of Brexit have dropped to their lowest recorded levels—falling to 12 per cent from 26 per cent four years ago— this issue still poses a significant worry for retail and IT sectors.

Joanna Morris, Novuna’s Head of Insight, said: “Small business owners might be mildly relieved by the recent stabilisation of inflation rates, but it goes without saying that the long shadow cast by the previously high rates and market turmoil witnessed over the past 18 months has had a monumental effect on their outlook and operations.

SME Publications/ SME XPO 2024

“As the backbone of the economy, small business owners find themselves in a relentless battle against rising costs and unpredictable market conditions, making the task of forecasting and managing their financial futures for the long term nigh on impossible.

“Leaders are crying out for a period of steadiness, predictability, and above all, certainty, Yet, with three-quarters of business leaders admitting to sleepless nights currently, it’s clear they are not finding this stability. This data serves as a crucial reminder of the resilience and adaptability required from small businesses to navigate these tumultuous times.”

SME Publications/ SME XPO 2024