One in six SMEs have less than £1k in savings says Yell

New research from digital marketing company Yell, who are headquartered in Reading, has revealed that almost one million UK SMEs have £1,000 or less in savings.

A study that surveyed over 500 leaders of UK SME businesses revealed that the low saving numbers reflected a tumultuous three year period marred by the COVID-19 pandemic and the ongoing cost of living crisis.

45 per cent of business leaders in the UK have stated that saving is much less viable now than it was prior to the start of the pandemic.

Furthering this, many SMEs believe that they will struggle to stay afloat for the next 12 months due to the cost of living crisis. Inflated costs and low savings has led to 1 in 10 (550,126 UK businesses) reporting that they aren’t confident that they will be afloat in six months time.

14.29 per cent of SME businesses in the South West feel that they may be forced to close in the next year, with 11.49 per cent of SMEs in the South East believing the same thing.

Yell spoke with business finance expert Connor Campbell, from comparison site NerdWallet, to provide some pointers for struggling SMEs. Connor said: “Cutting costs without sacrificing quality is a balancing act. Whenever you look to make a saving you should ask yourself whether it will materially impact the quality of your service or product. If it will, those savings may lead to greater losses down the line.''

Connor suggested that negotiating with suppliers, attempting to reduce utility costs (aka using cheaper broadband, or looking into energy saving measures), minimizing subscription costs through cheaper or free alternatives, and raising product prices, were all ways in which SMEs could try to soften the blow of the cost of living crisis.

He continued: “Where business have cut all the costs they can, the most important thing is to then minimise exposure to risk. For example, locking in contracts for longer periods of time is one way of doing this - if businesses can afford their outgoings at present, ensuring those prices don’t change for the foreseeable future is an effective way to strengthen their financial position.”

Read more - Things are looking up, but don’t expect too much too soon