Business risk down but concerns remain high

Overall business risk has dropped by 18% in four years, according to new data, yet concerns among businesses remain at an all-time high.

The Zurich SME Risk Index showcases a fall of 18% since October 2012 and is significantly down on the record high of 44.55 points recorded in early 2013.

Yet despite this, short-term business concerns among SME owners remain high, driven by anxiety relating to the EU referendum and wider political uncertainty.

For the 12 month period from October 2015, the number of SME owners that felt their business was at risk rose by 50%, with the threat of insolvency and other financial difficulty among the key concerns.

Issues surrounding skills and recruitment, insecurity over the demand for goods and services and doubts over the economy were also causes of anxiety for small business owners.

Whereas 44% of SMEs reported workforce challenges, 40% named market dynamics as their biggest worry – the highest level described for three years.

Fluctuations in the value of the pound have been a cause of further concern but SMEs were found to be positive over issues such as regulatory red-tape and suppliers.

In the case of the latter, SMEs report that supply chain issues are at their third lowest level recorded, while only a fifth of small businesses have concerns over regulation and compliance.

Given the wider uncertainty, many businesses are taking positive steps to protect themselves should something go wrong.

From having contingency plans in place to limit risk to undertaking independent business reviews to develop strategies for a more financial secure future, there are a range of options available.

Zurich’s Paul Tombs suggests that uncertainty in 2016 created “specific pressure points” for businesses that need to be addressed, including around financial and labour issues.

Capitalising on new business opportunities, accessing finance and driving growth will be key factors for ensuring the longevity of firms in the years ahead.

By Phil Smith

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