As many as 78% of small businesses say the cost of living crisis is the biggest threat to their survival in the coming year.
However, a quarter of Britain’s SMEs are ignoring their financial situation for fear of discovering how bad things really are, according to PayPal’s latest ‘Business of Change’ report.
The study into 1000 small business owners across the UK, found that small business owners “who do take their financial wellness” seriously reported that they have more self-confidence (45%), have saved for the future (42%) and experience less stress (39%).
Two-thirds of Britain’s small business owners told PayPal that the past two years have been the most challenging since they started their venture – and 47% fear the next 12 months could prove even more difficult.
SMEs cite a perfect storm of challenges
Although the immediate cost of living crisis, with the lack of consumer spending and hefty fuel price increases, is seen as the biggest threat, other challenges include maintaining a steady cash flow (29%), managing their own mental health (18%), and coping with the increase in the cost of raw materials (17%).
At a time when the UK economy is said to be at risk of ‘grinding to a halt’, most (52%) SMEs are concerned for their future, with more than a quarter of small business owners (27%) saying they are not sure that they will be in business in the next 12 months.
Business owners feeling the pressure
To keep their business going, SME owners are working weekends (44%), going six months or more without taking a holiday (36%), and a third are working seven-day weeks on a regular basis.
And the stress and worry of running a business keep 62% of SMEs awake at night.
Ben Ramsden, Head of SMEs at PayPal UK, said: “Financial woes and stress can have a negative impact on health and wellness. In tough times, staying on top of their finance wellness is a vital tool for small business owners.
“It needs to be a priority to minimise the personal impact of running a business, which can be an isolating and challenging experience for entrepreneurs.”