A new study by Yell reveals that over 1 in 6 SMEs in the UK have £1000 or less saved to help them stay afloat during a downturn in revenue.
The research, which surveyed 500 people, including trade and construction businesses, also highlights that 1 in 10 aren’t confident their business will still be afloat in just six months’ time.
For sole traders, this is even more of a concern, as 1 in 3 currently don’t save anything.
Almost half (45%) of those surveyed said they can save significantly less now, than they could three years ago prior to the start of the pandemic.
Based on the 5.5 million SMEs currently trading within the UK, the 17% that admit to having £1000 or less saved amounts to just shy of one million (935,214) businesses with extremely slim savings.
Where Do Businesses Save The Least?
| Rank | Region | % Saving £1,000 or Less Per Month, Including Nothing |
|---|---|---|
| 1 | East of England | 67% |
| 2 | South West | 57% |
| 3 | Scotland | 52% |
| 4 | South East | 46% |
| 5 | North West | 45% |
With some news reports showing that the cost-of-living crisis could last until 2027, many business leaders will be wondering what they can do to enable themselves to save more, and add more security to both their livelihoods, and those of their employees.
To help, Yell has worked with business finance expert Connor Campbell from comparison site NerdWallet, to come up with some advice for trades businesses:
Suppliers – If you are sourcing supplies, is there a cheaper version of the same product that will not harm the quality of your own offering? Or can you negotiate your deal with your existing suppliers, and see if they can bring their prices down?
Utilities – Similarly, can you reduce the cost of your utilities? This could be finding a cheaper broadband provider, looking into energy saving measures to reduce your electricity and gas usage, or even switching business energy suppliers entirely.
Check your subscriptions usage – Are there any services your business is paying for that you don’t use – or don’t use enough – that you can get rid of? Can you replace any of these services with cheaper versions, or even free alternatives?
Don’t be afraid to raise your own costs – You may need to consider raising your own costs. If so, you need to find the sweet spot between increasing the price of an item or service enough that it allows you to save more, but without it alienating your customer base and driving people away.
“Where business have cut all the costs they can, the most important thing is to then minimise exposure to risk,” says Connor Campbell. “For example, locking in contracts for longer periods of time is one way of doing this – if businesses can afford their outgoings at present, ensuring those prices don’t change for the foreseeable future is an effective way to strengthen their financial position.”
For the full findings, in addition to further tips and advice for businesses, visit: https://business.yell.com/sme-insight/slim-savings/
