UK small business values slump
The UK’s small businesses are now worth an average of £90,000, a considerable drop from just a year ago, according to new research from Bizdaq.
This year’s figure is down £4,000 on 2016, although it slightly above the average recorded in 2015 – highlighting wider economic volatility.
Figures from more than 7,500 small business valuations were used to calculate the averages, with values linked directly to net profit and turnover.
The study claims that reduced consumer spending and rising costs are having an adverse impact on small firms, as business owners are unable to realise the true value of their ventures.
Values in the north of England have remained broadly the same in the last year, dropping from an average of £80,000 to £79,000.
The drop in the south was more pronounced though, with average values plummeting from £97,000 to £91,000 between 2016 and 2017.
Different business types also experienced varied fortunes, with the average value of cafes dropping by 15% to £45,000, although the value of coffee shops jumped by £3,000 to £62,000.
Manufacturing firms have benefitted considerably in the last year, as their value surged from £325,000 a year ago to around £418,500 now.
London has been hit hard in the past year though, as the average business has seen nearly £20,000 wiped off its value.
Whereas small firms in the capital were valued at an average of £115,000 a year ago, that figure now stands at £95,000 – that level of decline is five times the national average.
The study suggests that economic uncertainty is partly behind the loss of value, alongside rising business rates that have pushed operational costs upwards.
This increases the risk of insolvency for those operating on very tight margin, while other businesses fearing financial difficulty may want to explore the range of alternative finance options that could be available.
The key with any prospective action is to act quickly, as this will likely increase the number of potential solutions that could be employed.
By Phil Smith