A recent survey conducted by Purbeck Personal Guarantee Insurance sheds light on the financial landscape of small businesses in the UK, offering insights into their resilience amidst economic turbulence in 2023.
Despite facing challenges such as high inflation and geopolitical unrest denting consumer confidence, the survey indicates a notable level of stability.
According to the findings, 31% of small businesses are reporting a good profit, while 45% are operating with a small margin of profit.
Notably, 18% state that they are breaking even, showcasing a mixed but generally stable financial scenario.
Looking forward, 30% of small business directors and owners express plans to seek new finance in 2024. Interestingly, 32% of those seeking finance aim to support cash flow rather than investing in business equipment or expansion. This signifies a shift from the previous year, as the proportion of businesses requiring cash to maintain operations has decreased from 53% in 2023.
In terms of personal financial strategies, only 16% of business owners have resorted to personal debt to fund their enterprises.
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This marks a significant decline from the 2023 survey, demonstrating a more cautious approach among small business proprietors.
Todd Davison, Managing Director of Purbeck Personal Guarantee Insurance, underscores the need for vigilance and resilience, especially in an election year where policy shifts can introduce economic uncertainty. Davison remarks: “Business owners should always be flexible and prepared for potential change and how it might impact business costs.”
He further advises that despite less than a third of business owners planning to seek new finance in 2024, all businesses should stay informed about funding options in case of unforeseen changes.
Additionally, when securing new personal guarantee-backed loans, Davison recommends obtaining personal guarantee insurance to safeguard the personal finances of business owners and directors in the event of a business failure.