Starting up and running a business is no easy task. Although it is a rewarding venture, which enables you to be your own boss and put entrepreneurial skills to use, there are certain problems you will likely face. Here are the top three problems that are affecting small businesses in the UK right now. If you are business owner, you are likely aware and if you are thinking about starting a business, its important to take these problems into consideration.
Late payments
Late payments in the small business sector are becoming an increasingly prominent problem. UK’s late payment culture is becoming responsible for killing 50 000 small businesses, as the owners simply cannot fund their businesses due to late payments. The late payment crisis means that small businesses are struggling, with cash flow being one of the biggest issues. Some directors of small business have admitted to taking cuts out of their salaries, to ensure a good cash flow for their business. Small businesses are collectively owed £26.3 billion and this works out on average as £32,185 each. These huge sums show how much of a detrimental effect late payments are having on the sector.
The government has acknowledged this issue and has put certain schemes to ease the pressure off of small businesses. A Late Payment Reporting Guidance was introduced earlier this year which will highlight how long the bigger businesses take to pay SMEs. Shedding light on the issue will hopefully result in a decrease in the huge sum owed to small businesses.
Additionally, it may be worth noting that there are methods of having your loans collected by professionals.
Funding
It is a time of uncertainty for small businesses in the UK with the political turmoil, from the EU referendum to Brexit negotiations. These major political events are making small business owners feeling uncertain and unsure. People are hesitant to invest in small businesses because they don’t feel like it is the right time. However, small business owners and potential entrepreneurs should be encouraged to follow their dreams of owning a small business, now more than ever. SME’s contribute £1.8 trillion to the UK economy, showing the importance of SMEs within the UK economy.
Funding has been a problem for small businesses because banks are hesitant to loan to small businesses. However, it may be worth noting that banks do tend to more convinced to lending to franchise businesses. The government is also helping with funding small businesses because they understand the importance of SMEs in the UK. There are plenty of funding options for you to consider, which may stray from the traditional banks loans. From peer to peer lending, to crowdfunding, there are definitely alternative methods you could consider.
Rising costs
There are certain costs which are rising that will affect SMEs, these include rising living wage as well as business costs going up. There are also additional costs such as compulsory auto enrolment, which need to be taken into consideration. Auto enrolment is a mandatory pension scheme which you have to offer your employees. These costs need to be considered and incorporated into business budgets etc to ensure that they are accounted for.
To reduce the impact of these three major problems for small business owners, the government will have to implement changes to ensure that the small business sector thrives. Despite major problems, the small business sector is strong and always striving for success.
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