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16% of SMEs at risk of going out of business

15 March 2014

16% of SMEs at risk of going out of business

Sixteen per cent of British small and medium-sized businesses (SMEs) surveyed consider themselves at high risk of going out of business within the next year due to financial pressures.

This is according to the latest quarterly SME Risk Index from global insurer Zurich, and polled by YouGov, surveying over 500 senior SME decision makers.

Certain sectors appear to be particularly vulnerable: the high street’s recent woes appear to be affecting confidence, with 21% of retailers now claiming to be at high risk of going out of business, an increase from 12% in the last financial quarter.

Similarly 24% of IT and telecoms-related SMEs say the same, also up from 11% in Q3, and the figure rises to a worrying 37% for construction firms, from 33% previously.

This outlook reflects a consistent view among SMEs questioned, with over three quarters of them (79%) continuing to raise concerns about the current economic climate, and 82% are not confident it will improve in the next quarter.

It is clear, however, that the SMEs becoming more adept at navigating themselves through tough times are those who look in the best shape for growth.

Furthermore, many SMEs are now looking to invest – overall, 29% stated that “expansion of the business in the UK” is a top two priority for 2013 – but, according to Zurich, may potentially be held back by continuing concern about the economic outlook.

When asked to pick their top three, acquiring market share from competitors was the second largest driver of growth (35%) for those businesses that have grown in the past year. This indicates that competition in the SME economy is fierce, in addition to the greater economic challenge.

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