The fall in business risk has occurred in spite of four politically turbulent years, although uncertainty is still reflected in the results. While wider SME business risk may be comparatively low, short-term business concern amongst SME owners is at an all-time high.
Between October 2015 and October 2016, there was a 50 per cent increase in the number of SME owners perceiving that their business faces higher risk now than 12 months ago, despite a dramatic reduction in overall risk in the business environment in that time.
The results from the survey of over 1,000 SME owners and decision makers, show that the spike in short-term business concerns are linked to a very few critical areas of risk. Recruitment issues, uncertainty over demand for goods and services and the future economic outlook are among the most prevalent.
Following the Brexit vote, the highest ever number SMEs have reported workforce challenges, such as availability of talent or expertise while two in five have reported concerns over market dynamics, the most for three years. In addition to this, after a year that saw the value of the pound fluctuate considerably, confidence that the economy will improve in the next 12 months is at its lowest in three years.
However, there is still hope for the future and when it comes to suppliers, red-tape and cost-cutting, the outlook among small and medium business owners and decision makers is positive. Supply chain issues were reported at the third lowest level ever, while the number of SMEs cutting prices, staff and wages were at the lowest on record, and the number of businesses concerned with regulation and compliance, plummeted to less than a fifth, also the lowest on record.
Results from the SME Risk Index suggest that the mood among small and medium business owners is one of caution. Overall, business are reporting a good environment that is favourable for their business now, with levels of risk at their lowest on record. Businesses are not complacent, however, and many SMEs are taking positive steps to safeguard the future of the businesses in the face of an uncertain future.
Paul Tombs, Head of SME Proposition at Zurich, comments: “The past four years have seen an enormous drop in business risk, which may come as a surprise, particularly after last year’s Brexit vote. Yet, the uncertainty of 2016 has clearly created specific pressure points around issues like the workforce of Britain’s small businesses and it is understandable that many business leaders harbour very real concerns for the future.”
“Small businesses are vital to the UK economy, and it’s essential that the UK cultivates a stable environment that allows them to build. Everybody, from the government to SME service providers, has a responsibility to help small business overcome economic and market obstacles to help business owners capitalise on new opportunities, and focus less on business concerns.”