Business risk at its highest level in nearly two years
Business risk levels for small and medium businesses are at their highest levels in nearly two years, according to a new study.
Zurich’s latest quarterly SME Risk Index, which gauges business risk considering a wide range of factors, shows the largest risk score since the first quarter of 2014.
The Index score rose to 40.18 points in the first quarter of this year, up from 38.28 at the same point in 2015. In the first quarter of 2014 it stood at a high of 43.19.
The survey of more than 1,000 SME owners and key decision makers also found that more than a third (39%) believed their businesses faced a greater risk now than they did at the same point 12 months ago. Almost one in 10 (8%) of respondents even said they had considered winding up their businesses.
The potential risks of a Brexit have been dominating the headlines but the Risk Index found that key issues for smaller businesses involved red tape and issues related to their workforces.
More than two-fifths (44%) of UK SMEs reported an ongoing skills shortage as an impediment to their business success, while just less than two in five (39%) cited layers of red tape in the form of regulations as a barrier to success.
Despite, or perhaps because of, the increased risk and a lack of confidence in the business environment, SMEs have become more innovative and ambitious as they look to secure their future success.
Nearly half (48%) of SMEs said they had expanded their business development activities in order to acquire new customers. Almost a third (30%) had diversified their business operations and over a quarter (28%) had invested in business assets in order to maximise their output.
These efforts appeared to have paid off for many of the businesses involved. Despite the increased risks, almost twice as many SMEs reported growth in the last quarter of 2015 compared to those that experienced a reduction in the size of their businesses.
By Phil Smith