Top 4 challenges for SME’s post Covid19
June 23, 2021
What a rollercoaster the past 18 months has been for many businesses. Going in & out of lockdowns, the law’s changing, managing staff & cash flow have proven challenging for many.
Unsurprisingly, the top four challenges facing SMEs in the coming year are a result of COVID-19 related financial pressures, according to the latest ScotPac SME Growth Index research.
According to the survey, optimism is returning to the SME sector.
When asked what they are most positive about for 2021, the most common response was getting “back in the black” (24%), and the corresponding factor of reducing debt levels (21% wrote in this response). Almost one in five small businesses (17%) named their plans to relocate or enter new domestic markets as the most positive factor for 2021.
Younger businesses (under 12.5 years) were much more likely to express positivity than their older SME counterparts about entering new domestic or international markets and releasing new products or services.
The study showed that 36% of SME owners suggested that they may have to close their doors unless conditions improved.
“It serves as a timely reminder for these businesses to seek expert advice around longer term strategic planning and risk planning, and to secure the right funding to help them with recovery and survival,” said CEO of ScotPac, Jon Sutton.
“This is good practice for any and every small business to undertake, given our research shows so few SMEs turn to the experts for advice beyond tax and compliance issues.”
The end of JobKeeper has also caused many to have less optimism within the SME sector with business confidence most hit with those who were struggling even before the pandemic.
Many SME’s think that if they can ride out 2020, they can survive anything.
The top four challenges SMEs feel they must overcome in 2021 are:
- servicing excessive debt levels (22%),
- diversifying their funding base/finding new sources of funding (16%),
- securing or increasing their customer base (16%)
- avoiding insolvency (11%).
Business owners cannot be expected to know everything and be able to navigate it. Working with experts in these areas will be important in order to achieve this post covid19 as we face the challenges of doing businesses differently or in new markets.
“It’s clear that small business owners, and their advisors such as their accountants and brokers, need to be making hard decisions about business structure, strategy and finding new and improved ways to fund the business for 2021 and beyond.”