Over 600,000 SMEs (businesses with 0-249 employees) could be at risk of collapse in 2020, new research by small business insurance provider Simply Business reveals.
Analysis of official government figures from the past five years from 2014-2018 reveals the average annual rate of business closures is 10.8% while a total of 508,865 companies were dissolved on Companies House in 2018-19.
This is the most amount of closures since 2009-10 which could have been because of the recession. With an average 10.8% overall business closure rate, 632,889 SMEs could potentially be at risk of collapse this year.
There were an estimated 5.82 million SMEs (0-249 employees) in the UK in 2019, turning over £2.2 trillion and accounting for over 99% of the total business population, so the collapse of small businesses could be a huge blow to the UK economy.
The study by Simply Business follows recent figures by the Federation of Small Businesses (FSB) showing small business confidence is at an eight-year low, with profitability and export expectations tumbling to a five-year low. This paints a bleak picture for the SME community, particularly for those thinking of starting their own business.
Roughly 80% of UK companies fail within their first year, and according to the latest figures from the Office for National Statistics, only 42.4% of businesses started in 2013 were still trading five years later in 2018.
In light of these figures, and to help support and enable more small businesses to get off the ground this leap year, Simply Business has launched a £10,000 grant for someone to use to take the leap in kick-starting their business.
The insurance provider will also be releasing a series of free guides to help people navigate the wider challenges of starting or growing a business – all designed to enable more UK SME’s to thrive.
Simply Business UK CEO, Alan Thomas, is calling on the new Chancellor, Rishki Sunak, to use his first budget to make it easier for small businesses to start and thrive in 2020.
Alan Thomas, UK CEO of Simply Business, commented: “Small businesses provide vital services and jobs in our communities. They are the heartbeat of our economy, contributing an enormous £2 trillion annually. Evidence that over half a million small businesses might close this year should cause alarm. Loss on this scale would represent a substantial blow to the UK financially, as well as to community life up and down the country.
“We’re calling on the new Chancellor to use his first budget to enable more start ups and help small businesses thrive. The financial benefit to our economy that SMEs provide should not be taken for granted.
“It’s clear the UK needs more SMEs, not less. That’s why we’re launching a £10,000 business grant to help small businesses make the leap, and overcome the common barriers of finance, knowledge and fear.
“Leap Years provide an extra day to shun the norm – an extra day to break the mould where normal traditions don’t apply. But we don’t believe this should be kept to one day – let’s make 2020 the year to make the leap, turn dreams into livelihoods with more successful small businesses in the UK than ever before. We’re here to enable big dreams, and no dream is too big or small.”
To apply for the £10,000 cash grant, click here
Applications close 31 July 2020. Winner announced w/c 15 September 2020