1 in 4 SME business owners report cost of living crisis impacting their wellbeing as well as their business

A survey by HSBC of UK small business owners has found that 1 in 4 have reporting the current cost of living crisis is taking a toll on their wellbeing.

Around two-fifths of business owners reported that rising inflation and a decline in consumer spending (41% and 38% respectively) was a threat to their business, with rising energy costs (36%), wage inflation (22%) and cash flow troubles (19%) also major factors.

Despite these issues being widely felt by UK SMEs, HSBC found that business owners were largely keeping their cost of living crisis worries to themselves – over 55% of respondents had not disclosed how these issues were affecting their business, either at work or with friends and family. Furthermore, nearly three-quarters (73%) had not talked to their bank about financial support, despite 29% dipping into personal savings in recent months to fund their business.

HSBC also disclosed that customers who are showing early signs of financial difficulty have reported experiencing sleepless nights, increased anxiety and worrying thoughts about the future.

Commenting on HSBC’s findings, behavioural psychologist Jo Hemmings said:

“With the rising cost of running a company, on top of an increase in the cost of living, small business owners are facing a perfect storm.

“It’s not surprising that many are struggling with their personal wellbeing and it’s understandable that some feel reluctant to open up about the challenges ahead. But business owners shouldn’t see talking through their personal or professional concerns as any kind of admission of failure and research shows that internalising anxieties will not help.

“They are not alone and I’d urge those feeling the pressure of running a small business at this difficult time, to talk through their challenges with professionals who can provide practical help, including their bank.”

In light of HSBC’s findings, the bank is inviting business owners who may be feeling financial stress to speak with finance providers to assist in creating a more manageable financial plan. While options will be considered on a case by case basis, solutions could include:

• Capital repayment holidays to free up cash within businesses
• Reviewing overdrafts or trade loans to allow stock to be held for longer
• Providing trade finance solutions to support customers with their supply chains
• Extending Bounce Back Loan repayments through the pay as you grow scheme
• Partial or total refinancing or restructuring of a facility
• Extension of recovery/collection periods

Peter McIntyre, Head of Business Banking at HSBC UK, added:

“With the current economic environment creating business uncertainty, it’s fair to say that many small companies have had a rough ride these last few months.

“Owners are at the helm, so it’s no surprise that navigating cost challenges is having an impact on their own personal wellbeing. The good news is that when customers engage with us early on they are more likely to avoid going into financial difficulty.”