More than half of UK SMEs fail to last five years

More than half of small businesses in the UK fail to celebrate their fifth birthday, according to new research from RSA.


The firm’s Growing Pains study revealed that 55% of SMEs fail to survive beyond five years, noting a downward trend in survival rates since 2004.


This comes despite recent improvements in economic conditions, with survival rates still below pre-financial crisis levels.


Of all sectors, construction has been worst hit as only 44% of SMEs in the sector make it past the five-year marker.


Meanwhile, those in the health sector have also experienced difficulties, with 56% of firms surviving for five years or more.


While conditions in the UK are suited for starting a business, the research suggests that maintaining it is considerably more difficult.


Rebuilding confidence following the financial crisis will be a slow process, while a number of issues need to be tackled in order to boost growth and business success.


Struggling to grow firms was noted by 63% of respondents to the survey, although that figure was as high as 80% in London and the South East where the marketplace is highly competitive.


Other concerns identified by small businesses were the UK tax system and its complexity, the difficulty of attaining bank finance and general business costs.


There are more than five million SMEs in the UK, but these barriers are preventing progressive growth according to the study.


This could partly explain why such a high proportion of small businesses fail to maintain growth, while late payments and cash flow issues will undoubtedly also have an effect.


Some firms in difficulty could ease their situation by seeking the assistance of insolvency specialists who can provide various advice and solutions.


The government will play a role in driving growth among all business types and while some businesses will unfortunately succumb, there is no reason why some of them at least cannot recover to fight another day.


By Phil Smith


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