Although for small businesses the trials and tribulations of trading within a recession dig a lot deeper.
It’s undeniable that the hard-hitting financial crisis of 2008 has had a long-lasting effect on the UK. Since then reminders of the UK’s bleak economic outlook have been commonplace, plastered daily across almost every newspaper and of course a large focus across news channels.
Recessions and general financial uncertainty are a small businesses’ worst nightmare. With less disposable income in the hands of consumers many small businesses struggle to continue trading, as their cash reserves become stretched and the potential for insolvency increases.
In light of a desolate economy many small businesses struggle to develop and maintain financial backing. If a business has declared itself bankrupt the likelihood of acquiring a bank loan or the interest of a venture capitalist diminishes quickly. However in these recent testing times many small businesses have sought after different methods of financial security. The use of online business loans has become a popular method of finance, as business owners seek quick and easy financial backing. In fact, the use of wongaforbusiness business loans is steadily increasing in popularity and a useful tool for businesses looking to secure loans.
Arguably one of the cruelest results of a recession is the damage to entrepreneurial spirit, leaving fewer people happy to take on riskier business ventures. Given that the vast majority of small businesses fail within the first year, chances of success shrink further during times of economic gloom. It seems more financially prudent to stay safe in a lower paid job and maintain what little financial security one can cling on to rather than chancing one’s arm in business when the odds are firmly stacked against you.
Morale within a workforce is also likely to suffer at the hands of a recession. Wage cuts, shorter hours and less overtime are all products of a miserable economy, all which need to be managed by businesses. Essentially, employees are paid less to do the same job and maintain the same level of productivity. It’s likely that any employee benefits will also be scrapped in the wake of job cuts.
It is difficult to forget the heartache caused by redundancies and the inability of businesses to seek further employees. The year before the recession, 2007, unemployment in the UK amounted to 1,649,000. The following year would see a 13% increase with 1,860,000 people unemployed in the UK by the end of 2008. Despite recent growth in the UK economy, unemployment currently sits at 2.51 million, with many of those who lost their jobs in the recession still unable to find work.
It is of course important to remember that no recession lasts forever and that economic prosperity often follows soon after. It seems small businesses will no longer take for granted times of economic prosperity and make prudent financial decision in case of future problems.