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Concerns for Welsh Microbusinesses

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Worried Welsh microbusiness owners including retailers, hairdressers and builders estimate that, despite lockdown now being eased, they have an average of just EIGHT weeks left before they will be forced to stop trading. 

New research by Smart Energy GB, which surveyed the owners of 38 Welsh microbusinesses (firms with less than 10 employees) reveals the devastating financial effects of the pandemic, with over 81% of those polled anxious about how they will keep their business afloat in the coming weeks and months. The biggest concerns for struggling owners are a lack of customers, cashflow issues and that consumer confidence won't return quickly enough.

While many Welsh microbusinesses have now started trading again, over half (55%) of respondents admitted they had already considered permanently closing their doors because of the pandemic's impact. To help support microbusinesses during this difficult time, Michelle Ovens MBE, Founder of Small Business Britain, has created some money saving tips which may help towards a healthier bottom line.

Commenting on the current situation, she said:

COVID-19 has been hugely challenging for microbusinesses across Great Britain. As lockdown eases and firms get back to business, many are weighing up their financial situation and focusing on how to recover and move on. Now is therefore a good time to evaluate your business expenditure and identify new ways to save money.

Everything from negotiating deals with suppliers, through to reviewing business models and shopping around for deals should be on the table. Embracing new technologies such as smart meters, which help you to identify ways to reduce your energy consumption and therefore save money, is another particularly valuable thing to do at this time.

Understandably, Welsh microbusiness owners have been keeping an even closer eye on their cash flow, with many taking drastic measures such as not paying themselves (26%), dipping into their personal savings (26%) and borrowing from friends and family (11%) to stay afloat. Almost three in ten owners (29%) now also check their finances daily – compared to just one in ten before the pandemic.

Yet despite this laser-like focus, many admitted that they still estimate their energy costs, despite almost half of Welsh owners (45%) agreeing that having a better understanding of their energy use would give them greater control over their business expenditure. In fact, energy is the most common cost that microbusiness owners estimate, followed by tax and staff wages.

Robert Cheesewright, Director of Corporate Affairs at Smart Energy GB, said:

There’s no doubt it’s been an incredibly difficult time for businesses, and particularly for those at the smaller end of the scale. Even though microbusiness owners have taken a forensic approach to their expenditure, and continue to make some difficult cost-cutting measures, energy is still viewed as a cost that can only be estimated.

One easy step that will give microbusiness owners control back over their energy costs is contacting their energy supplier to see if they are eligible for a smart meter. This will help them keep better track of their energy and give them the information they need to reduce their consumption – 46% of those surveyed in Wales who have had one installed say it has given them great understanding of their energy use.

Tiffany Hall, co-owner of Amaryllis, an eco-friendly salon based in Cardiff with six employees, said:

Our smart meter has been really helpful in terms of budgeting, for example during lockdown the business used a lot less energy. Having access to our energy data enabled us to track exactly how much money we were saving and amend the budgets accordingly.

To find out if your microbusiness is eligible for a smart meter, contact your energy supplier.

Money Saving Tips for Microbusiness

  • Forecast cash flow. To save money, you first need to know where it’s going and when it’s coming in. While there’s some sophisticated cash flow software out there, sitting down with a simple spreadsheet to plot different financial scenarios can be just as effective too.
  • Access financial support. If you do have a shortfall to meet, there’s lots of financial support out there including Bounce Back Loans and Business Interruption Loans. The Government’s new Job Retention Bonus might help make it more affordable to retain staff. Just remember that any extra debt you take on will need to be paid back.
  • Cut costs. Two thirds of microbusinesses have changed their business model as a result of the crisis. Reshaping a business can mean extra costs, so interrogate all your spending to see if there are new ways to save – even if it’s how much you spend on milk!
  • Shop around. If you have costs coming up for renewal, take the time to search for deals. You may find discounts through business price comparison sites, partners and member bodies, or even referral schemes offered by other small businesses.
  • Save energy, save money. Energy usage is one of the expenses microbusinesses are most likely to estimate. A great way to understand how much energy you’re using, identify ways to reduce your consumption and therefore save money, is by getting a smart meter installed. Contact your energy supplier to find out if your microbusiness is eligible for an installation.
  • Negotiate openly. If you are really struggling, don’t suffer in silence. Open up a conversation with everyone you can to see if it’s possible to arrange discounts, or more manageable payment terms. Speak to your accountant, or HMRC, about taking up the current offers to defer tax payments like VAT to aid cashflow.
  • Embrace digital. As well as making your business more efficient, tech can help you to do some things yourself rather than outsourcing. Canva has a basic free version that can help you make engaging graphic designs, while Facebook has launched a new Shops feature to help small firms sell online. Check out what support you can access via any existing digital partners such as Google’s SME ad credits or the American Express Shop Small offer.
  • Find support groups. The pandemic has been overwhelming for many businesses, so it’s important to make sure you have the right support. Many business schools offer free support through their networks, particularly those belonging to the Small Business Charter. There are also regular, free online events through Small Business Britain’s Facebook channels.

https://www.smartenergygb.org/en/get-a-smart-meter/small-businesses/money-saving-tips-for-small-businesses