The findings come from the latest SME Risk Index by global insurer Zurich, and highlight a persisting threat that many small businesses face – that although many signs point to recovery, a sizeable number of firms are still teetering on the brink of shutting up shop.
Additionally, one quarter of the SME decision makers surveyed said their business had to lower their prices over the past three months because of the current economic climate, and 15 per cent have had to give up a staff member within the last three months. Domestic competition is a key concern too, with well over a third of SMEs listing it as one of the top market threats to their business.
Interestingly, despite these figures, concerns about overall business risk have fallen over the past 12 months. This drop could be related to a decrease in worries expressed by SMEs in other areas of risk. For example, less than half of the SMEs surveyed are now worried about maintaining good cash flow within their business, a 6 per cent drop on July 2013 and less than a quarter are concerned about their debt levels, a 5 per cent drop on July 2013.
Perhaps most surprisingly one quarter of those surveyed say their business uses technology but they don’t face any risks from it, for instance hacking or data loss. Likewise a quarter say regulation poses no challenge to their business at the moment.
Richard Coleman, Director of SME at Zurich, comments: “Our research demonstrates that while concern about risk amongst SMEs is falling, the risks themselves are still very much there. That the number of companies considering closing down because of the economic climate has remained consistent over the past twelve months, suggests that serious financial difficulties are still on the agenda for many.
“While it’s great to see that SMEs are feeling better about the risks their businesses face, the findings suggest to me that the recovery isn’t affecting all firms equally. It appears there remain at least two ‘tiers’ of SMEs, with a reasonable number still struggling as the recovery gains pace. We have often found a link between strong companies and a strategic approach to risk, so with the economy improving all the time, the winners will be those business owners who take control and gain peace of mind through better risk planning and advice.”