SMEs lack confidence as Christmas looms

Only half of the UK’s small businesses have confidence in their trades as Christmas approaches, new research from Zurich has revealed.


Younger business owners were likely to be more confident as they showed more optimism in the latest SME Risk Index. Just 52% of firms were confident in their business while 13% thought Christmas did not benefit them. The remainder sat on the fence by exhibiting seasonal indifference.


The influence of age


Some 56% of 25-34 year old decision makers had positive feelings towards their trade and the Christmas period while only 45% of those aged 55 or over felt the same way.


Seasonal business models can provide SMEs with a number of obstacles to overcome as 38% said they noted cash flow problems as a result of fluctuations in trade.


A further quarter of the firms said they struggle to plan for the future as it is difficult to fully grasp the financial situation. Events such as Black Friday and Cyber Monday can lead to spikes in sales but this can also hide other periods when there are virtually no sales at all.


This can severely disrupt cash flow and put companies under pressure if sales targets are not met or if suppliers delay payments.


In situations where cash flow issues are especially pronounced, business restructuring could help limit any negative issues which could develop as a result.


Meeting targets requires clear goals and well thought out marketing and sales techniques, ensuring that the firm can take advantage of the seasonal conditions.


Despite the low confidence, there is still encouragement to be taken from the statistics which show younger business owners to be more positive about their outlook – indicating that a more positive future of growth could be in store for the business world.


As long as they plan ahead, SMEs should be able to avoid seasonal shocks but a back-up plan should also be implemented to ensure they can cope with any unexpected changes that might arise.


Firms must adopt a flexible approach to trading over Christmas so that a lack of finance or sales income does not lead to severe disruption.


By Phil Smith


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1144.

View all Business Insights