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Nearly 80% of SMEs see cost of living crisis as biggest threat

Three-quarters of small businesses (78 percent) see the cost-of-living crisis as the biggest threat to their survival in the coming year.

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Three-quarters of small businesses (78 percent) see the cost-of-living crisis as the biggest threat to their survival in the coming year.

But despite the focus on rising costs, a quarter of Britain’s SMEs are ignoring their business finances for fear of discovering how bad things really are.

So says PayPal in its latest Business of Change report.

> See also: Small businesses facing 250% gas price increase

The irony is that small business owners who do grab the nettle and take their “financial well-being” seriously, told the payment giant that they have more confidence (45 percent), saved for the future (42 percent), and experience less stress (39 percent).

Two-thirds of Britain’s small business owners say the past two years have been the most challenging since they started their business.

Nearly half (47 percent) fear that the next 12 months could be even more difficult.

Although the immediate cost of living crisis, with the lack of consumer spending and solid fuel price increases, is considered the biggest threat, other challenges include maintaining a steady cash flow (29 percent), managing their own mental health (18 percent). , and dealing with the increase in cost of raw materials (17 percent).

Sandy Ruddock, co-founder of Scarlett & Mustard, said: “Our biggest challenge has been the rising cost of raw materials, but we are reluctant to raise our prices so as not to have an impact on our customers – it’s a lot of pressure to handle.”

More than half (52 percent) of SMEs are worried about their future, with more than a quarter of small business owners (27 percent) saying they are not sure they will be in business until the next 12 months.

> See also: Nearly 500,000 small firms run the risk of breaking

To keep their business going, SME owners work weekends (44 percent), go six months or longer without taking a vacation (36 percent), and a third even work seven-day weeks on a regular basis. base.

The stress and worry of running a business keeps nearly two-thirds of SMEs (62 percent) awake at night, leaving a third feeling alone and isolated because there is simply too much going on in the world for them to process.

However, Sandy Ruddock of Scarlett & Mustard said the increase in sales since the re-launch of their website last year has helped ease some of that pressure. Eighty percent of her sales are now made online only through Paypal.

Ruddock said: “It has really helped relieve some of the associated stress and I would definitely recommend other small business owners who are feeling the pressure to invest in their social media presence to further promote online growth.”

Finance wellness

This year’s PayPal Business of Change report, however, is not all doom.

In fact, one in five SMEs agree that the past two years have had a positive impact on their ability to manage their financial well-being, with 56 per cent feeling more financially sound, 27 per cent feeling back in control of their business, and one in five (21 percent) feel more empowered as a business owner since improving their financial knowledge.

Indeed, the challenges of Covid and Brexit have forced many SMEs to get above their finances by upgrading themselves by using financial applications (31 percent) and learning from past mistakes (53 percent).

Twenty-nine percent of SME owners say achieving holistic financial well-being will enable them to take back more time for themselves, while 24 percent will use their newfound financial health to grow their business.

Ben Ramsden, Head of Small and Medium Business (SME) at PayPal, said: “Financial misery and stress can have a negative impact on health and well-being. In difficult times, keeping up with their financial well-being is an essential tool for small business owners. It should be a priority to minimize the personal impact of running a business, which can be an isolating and challenging experience for entrepreneurs. ”

In April, PayPal surveyed 1,000 small business owners nationwide for its report.

Worried about the financial health of your business? SmallBusiness.co.uk has teamed up with PayPal UK to bring you the PayPal Check-In Festival, a series of webinars aimed at connecting you with knowledge and expertise with fellow small business owners, and offering practical advice on better manage your financial well-being in 2022 and beyond.

Save these dates in your diary this June to explore the full PayPal check-in fee:

8 June 2022‘Help grow your sales online and offline 11:00 – 11:45

15 June 2022 – ‘Help control your cash flow’ 11:00 – 11:45

29 June 2022 Help maximize your international trade opportunities’ – 11:00 – 11:45

To sign up for our first PayPal sign-up webinar on 8ste June click here

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