The UK’s economy might be surpassing its pre-recession peak of 2008 but many SMEs are finding conditions are tougher than ever.
According to research by asset-based lender Close Brothers Invoice Finance, 21 per cent of Britain’s smaller firms believe that business is tougher than ever before. The study also revealed that there is a lack of confidence when looking to the future, with more than half (53 per cent) saying they do not expect their business to grow over the next year.
The survey of 700 business owners founds that 49 per cent have no plans to raise finance in the near future while, of those that do, 36 per cent will do so using a bank overdraft or loan.
It would appear that the purported economic recovery is not being reflected among SMEs yet. What this does mean, however, is that if these smaller companies do find themselves in a state of financial distress then there will be an upturn in acquisition opportunities for the stronger, more stable businesses.
From winding up petitions through to administrations and liquidations, by keeping tabs on SMEs that are struggling to survive in the improving markets, there is a great chance for those with confidence in their own forecasts – not to mention access to necessary funding – to pursue inorganic growth, thereby allowing them to thrive in the better economic conditions.
Common problems that are pushing SMEs into financial difficulties were cited as late payments (40 per cent) and general cash flow (19 per cent). Between these two interconnected factors businesses are seemingly struggling to manage their accounts effectively, thus making trading as normal difficult, let alone finding ways to grow the business.
Nevertheless, it is essential that with the economy improving the healthier SMEs capitalise on acquisition opportunities available to them so they can keep pace with the market they operate in, lest they themselves be squeezed about by more aggressive, growth-conscious competitors. 
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