Almost 1M UK businesses have £1,000 or less in savings

More than £1m was paid to energy customers with Octopus Energy on Tuesday as part of a power saving scheme.

New research has revealed the concerning financial tightrope many UK business leaders are walking, as almost one million SMEs have £1,000 or less saved, to help them survive any decline in their revenue.

The study, which surveyed leaders of SME businesses within the UK, sought to uncover the financial landscape owners are currently facing, following a tumultuous three-year period marred by the COVID-19 pandemic and the ongoing cost of living crisis.

With almost half of business leaders in the UK stating they can save significantly less now, than they could three years ago prior to the start of the pandemic, it’s no surprise that savings levels are so low. Based on the 5.5 million SMEs currently trading within the UK, the 17% that admit to having £1,000 or less saved, amounts to just shy of one million (935,214) businesses with extremely slim savings.

As experts suggest that businesses should have 3-6 months of operating costs saved in the bank, this paints a particularly worrying picture, especially as the research also found that 1 in 10 businesses with up to 49 employees have no savings whatsoever, putting the jobs of millions at risk.

The Cost of No Confidence

The ongoing cost of living crisis is undoubtedly having an impact on businesses having the ability to save, as 1 in 10 SMEs say they can’t save anything each month, with a further 9% also only able to save up to £200 per month. For sole traders, this is even more of a concern, as 1 in 3 currently don’t save anything to help keep their business buoyant each month.

Inflated costs and low savings are certain to have a knock-on-effect on the confidence of those at the top, and the study goes on to show that 2023 could be a troubling year for many. 1 in 10 (amounting to 550,126 UK businesses) aren’t confident they’ll be afloat in six months’ time, a number that rises again when looking further towards 2024, with 13% of all UK SMEs not feeling confident they will still be trading 12 months from now.

This lack of confidence is more prevalent in certain parts of the country than others, with more business leaders in London feeling the pinch of what is an already expensive location to run a business and worrying whether they will still be around come 2024.

“Where business have cut all the costs they can, the most important thing is to then minimise exposure to risk. For example, locking in contracts for longer periods of time is one way of doing this – if businesses can afford their outgoings at present, ensuring those prices don’t change for the foreseeable future is an effective way to strengthen their financial position.”

Mark Clisby, Co-CEO at Yell, who commissioned the research, said: ‘’There is currently a lot of discussion around personal savings, and this feedback from UK SMEs is a good reminder of the importance of regularly reviewing where to invest and where to make savings.