For struggling business owners, it is not the end of the road. SMEs still account for 99.9% of the UK’s business population: a clear indication of the important role small businesses continue to play in the UK's economy and 2020 also saw the lowest number of business failures since 2016. This was due to the large number of government support measures announced in response to COVID-19.
Due to inflation, SMEs have been largely affected again and lenders are now trying to support businesses as much as they can. Small businesses are the backbone of the economy so it’s incredibly important they’re supported and protected.
How are small businesses being affected by economic uncertainty?
Inflation is really impacting small businesses right now, from disrupted supply chains, higher wage bills and the rise of the cost of energy. The ONS reported that looking ahead to April 2023, approximately 72% of businesses reported some form of concern for their business.
More so than consumers, who generally have fairly stable ingoings and outgoings - a business's cash flow can significantly vary as it’s impacted by lots of different factors. Maintaining sustainable cash flow is important so we recommend reading on to discover what you can be doing right now to achieve that.
How can businesses survive (and thrive) during this time?
Take a three pronged approach
If businesses take a three-pronged approach they’ll do just fine - not only to survive but to thrive. Starting by following these three steps will help.
Step 1: Take a step back - knowing where you are is the first step in building out a really solid plan
Step 2: Project forward - plan where you want to go and how you’ll get there - that doesn’t necessarily mean having to grow - maintaining where you are could equally be fine
Step 3: Plan for failure - that's not to say it's going to happen, but building out a plan for when things go wrong puts you in a much better position to take more measured action to get things back on track
What can small businesses do?
It's time to start innovating. At mycashline, we're all for innovation.
Innovation is not just about creating a new product or creating something completely different. Innovation happens through customer experience, brand, delivery and product lifecycle.
It isn’t about what is "in trend" and is rather about what is relevant through connecting to the market.
Time is precious to small business owners, so innovating in the space will be huge to allow them to focus more time on the things that matter to their business.
How is mycashline supporting struggling business owners?
We're here to fix business finance. We, therefore, support small businesses and encourage growth even in the most difficult times. In economic turbulence, it can be easy to forget about growth, but it's in the tougher periods that some of the best ideas and businesses are formed.
As an alternative lender, it’s so important that we can help entrepreneurs and small business owners access funding to be able to grow and develop their businesses. Growth is something we feel extremely passionate about. Our four brand values 'GEMS' (Growth, Enthusiasm, Maintaining Accountability and Seeing Strategically) have growth at the forefront.
We're changing our process to become more supportive of small businesses.
For instance, the rise of Open Banking hasn’t been as readily adopted in business lending until recently - but we are progressively moving towards it - it can open up doors to make better, more informed lending decisions in the hopes that we can offer more businesses chances for funding by using the valuable real-time cash flow and forecasting insights it provides. We predict this improve credit decisions and will improve the customer's overall experience.
Moving forward, we're launching mycashline Wave - a new-to-market product that works with a business to vary loan repayments based on actual in-month turnover. Unlike traditional loan products, it will help better protect cash flow from lower periods of lower turnover by reducing the monthly repayments and making those up in months with higher turnover.
As an alternative lender, we’re able to understand a business more deeply to look outside the box and help them get funding, even if they have a thinner credit file.