Small and medium enterprises (SMEs) in the United Kingdom face bigger issues than Brexit, according to a new report.
While Brexit poses short-term economic uncertainty, SMEs’ key concerns surround more long-standing issues such as increasing competition, and cash flow, say commercial insurers RSA.
Commercial insurers behind a new report suggest small and medium enterprises in the UK face bigger issues than Brexit and call on the government to do more to help. Image: pixabay-647205
They also note brokers who deal with SMEs would add cybercrime to the list of top three risks that pose “bigger issues than Brexit” for UK SMEs.
Cybercrime key issue facing SMEs
In its Future Impacts report, RSA say 41 percent of brokers, compared with only 14 percent of small businesses, would include cybercrime in the list of top three risks facing SMEs.
The implication is SMEs are perhaps not as aware as they should be of specific risks such as cybercrime. The report notes:
“SMEs tend to consider macro-level risks to their business as more significant, while brokers tend to place more
weight on specific threats, such as cyber.”
RSA draw attention to the PwC report commissioned by the UK government that found 74 percent of SMEs had suffered an information security breach in 2015 – up 60 percent from the year before.
Russell White, schemes and deals director, regions and SME, commercial risk solutions at RSA, says the “average cost of a cyber security breach to small businesses is between £75,000 and £311,000.”
SMEs do not see long-term negative consequences from Brexit
On the issue of Brexit – the UK’s referendum vote to leave the European Union – small businesses do not see negative long-terms consequences for growth.
Over two-thirds of the 1,000 SME decision makers who took part in the RSA survey in September said Brexit will either have no impact (43 percent), or will have a positive impact (27 percent) on their business.
Fewer than one in four (23 percent) said Brexit would a negative effect, while less than a fifth (17 percent) ranked Brexit among the top three risks to business growth in the next 12 months.
Manufacturing, IT, construction, and leisure SME sectors were particularly more positive than negative about the impact of Brexit, while education, business services, professional services, and healthcare sectors were more negative than positive.
The broker view on Brexit’s effect on SMEs was also more positive than negative. When asked what effect Brexit will have on the long-term growth of their SME clients, 32 percent of the 80 brokers surveyed said the consequences would be positive and only 17 percent said they would be negative.
RSA conclude that UK SMEs face “bigger issues than Brexit,” and note:
“The disparity between the overall positive outlook SMEs have about Brexit with the economic uncertainty that SMEs perceive as the most major risk is notable; while Brexit is not perceived as a risk in itself, the uncertainty it is causing could be having an indirect impact. But this disparity also points to the softening of business growth irrespective of Brexit.”
RSA say they also found that 71 percent of SMEs expect their revenues to shrink or stand still in the next 12 months, and just over half (51 percent) say they government is not doing enough to help them grow.
The insurance firm calls on the government to:
– provide more market and consumer information to help SMEs plan business strategy
– give SMEs advice on how to protect against economic uncertainty
– invest in broadband, public transport, build infrastructure, so SMEs can reach more consumers
– improve SMEs’ access finance so they can expand
– give out more information on data and reasons for failure and bankruptcy so SMEs can improve their risk management
“SMEs are significant drivers of UK economic growth, with combined revenues of around £1.8 trillion. It is crucial that they are given as much support as possible in order to help them thrive.”
The report notes that SMEs employ around 60 percent (15.7 million) of the UK’s private sector workforce. They also account for nearly half (47 percent) of private sector turnover.