Small Business

Nearly 60% of businesses face going under

Nearly 60 per cent of small businesses fear their business could be going under in the coming year as a result of economic instability.

An increasing number of companies are under stress as they are hit by inflation, higher energy bills and an economy likely heading into recession. Plus, legacy Covid debt still has to be repaid.

Small businesses in Norwich are most at risk of closure, with 74 per cent of small business owners saying they could go under this coming year, according to Towergate Insurance.

>See also: Businesses face £34bn pension black hole

Businesses in Manchester, Sheffield and Brighton are also in the top four locations most at risk of business closures.

Human resources is seen as the sector most at risk of closures, followed by finance and manufacturing, with supply chain delays seen as the biggest threat to business survival.

The jumpy outlook comes on top of the number of firms on the brink of going bust jumping by more than a third at the end of last year, according to insolvency firm Begbies Traynor.

>See also: 50 shops closing a day in the UK

It expects this number to rise due to higher costs and consumers cutting back their spending.

Julie Palmer, partner at Begbies Traynor, said it was receiving an increasing number of calls from business owners who were concerned over whether they could carry on.

“What we are hearing from directors of businesses is extremely distressing,” said Palmer. “We came into 2022 hopeful that the pandemic was fully behind us and better times were ahead, only for Russia’s invasion of Ukraine to unsettle the global economy, leading to spiralling inflation and soaring energy bills and laying the foundations for what looks like a global recession.

“In the UK, in particular, strikes are just piling on the pressure as staff struggle to get to work and customers stay away.

“We’re taking calls from company bosses who are having trouble digging deep enough to keep battling on. They are already having to pay back the support they took to get through Covid and, anecdotally, we are hearing that both the Government and HMRC are becoming more determined in pursuing debts, while other creditors are increasingly turning to the law to recover their debts.

“Throw in a such a gloomy economic outlook, with inflation at 40-year highs and interest rates at levels not seen for 14 years, and you can see why more and more companies are starting to feel the burden of their debts, making directors question whether they can go on.”

Further reading

Small firms forced to use savings to survive


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