42% of Small Businesses in Financial Difficulty
Small firms still struggle with start-up costs with 52% admitting they may not be able to recover
New research has revealed 42% of small businesses are having financial problems with only 33% stating their company is “going from strength to strength”.
The study, which was conducted with 732 small and mid-sized firms, revealed the main cause for financial concerns was attributed to overspending during start-up years (52%), followed by renting or buying expensive property (48%), over hiring (39%), inefficient pricing (38%) and lack of business (33%).
The research demonstrates that small and medium sized firms need to ensure they plan ahead with the majority of financial difficulties coming from entrepreneurs failing to forecast expenditure. In addition, whilst 25% of participants who indicated they were in financial trouble stated they were confident they had moved on and learned from previous mistakes – 52% worried their business would be unable get past them.
The research highlighted disappointment among business owners as over a fifth (22%) of respondents admitted to launching their own business “to get rich”. Other popular reasons for starting a business were “wanting to be my own boss” (37%) and work flexibility (32%).
Nick Swan, CEO of VoucherCodesPro, who conducted the study, commented on the results:
“Launching your own company is always going to be a massive risk, whether it’s your first time or you’ve got a whole portfolio of successful businesses. It’s about believing in yourself and venturing out to try something new and show the world what you’re made of.
“Like the results of this study show, even if the company does fail, it’s not necessarily a failure if you learn from the mistakes you made and try again. Business is unpredictable, it always has been and always will be, and the economy doesn’t always help, but you won’t know if you can do it unless you try.”
For more information to help you with your business’ finances have a look at our guide to cashflow management here.