Business taxation has topped the list of concerns for UK small businesses according to specialist insurer Hiscox’s second annual SME Risk Barometer, which measures the top ten business concerns for small to medium sized businesses.
Amid growing concerns that the recent decision to increase capital gains tax will have a negative impact on SME owners, four out of five of the SMEs surveyed are already citing the burden of taxation as their top worry.
The Hiscox 2007 Risk Barometer also reveals SMEs, which make up 99% of all UK business, are feeling the effect of today’s challenging economic environment. Pressure to increase sales has shot from fifth to second place in the poll, while the effect of the economy on business was a worry for three quarters of the SMEs polled.
Worries around cashflow have also increased and are now ranked the sixth top concern, compared with ninth place in 2006. Linked to cashflow, clients refusing to pay also featured in the top ten concerns for the first time.
In 2006, at a time of sharp rises in energy prices, increasing energy and rent costs topped the list of SME concerns. However, it seems small businesses have more pressing concerns in 2007 as rising energy prices have dropped to fourth in the poll.
Hiscox’s 2007 Risk Barometer also found that processing paperwork, complying with UK company law, and dealing with competition were all concerns for a high proportion of the SMEs surveyed. Despite growing calls for businesses to take the lead in the fight against climate change by improving their green credentials, only 57% of SMEs admitted to being worried about their carbon footprint – suggesting that more immediate risks such as technology malfunctions or problems relating to cashflow, remain more pressing.
Small businesses may be finding it difficult to keep on top of the many different challenges they face, but the Hiscox 2007 Risk Barometer indicates they know how important it is to ensure nothing slips. More than half of SMEs (51%) admitted to spending more time looking at risk management issues than they did two years ago.
Top 10 SME CONCERNS IN 2007
1. Business taxation such as local business rates, VAT and national insurance (80%)
2. Increasing sales or winning new business (76%)
3. The effect of the economy on the business (75%)
4. Rising costs such as energy or rent (74%)
5. Paperwork/regulation (73%)
=6. Competition (68%)
=6. Cashflow (68%)
8. Compliance with UK company law (66%)
=9. Technology malfunction (61%)
=9. A client or clients refusing to pay (61%)
Hiscox’s Risk Barometer is an annual report that assesses SMEs attitudes towards risk management, providing an up to date analysis of the climate in which they are operating. More than 500 SMEs were interviewed on their attitudes towards risk, their main business concerns, and their levels of insurance cover.