Commercial Director of Savings
The last 18 months have been a challenge for everyone, but the impacts of the pandemic have been particularly hard for micro-businesses. Having to navigate the reality of several lockdowns has meant that many small businesses have lost huge income, with many claiming they have not had the support from the Government they think they deserve.
As micro-businesses have reported losses in income, many have had to turn to business savings to carry them through, which has led to savings pots being wrung dry. Firms will now be wondering how they can build these savings pots back up to enable them to move past the pandemic and any financial fragility that went with it.
Those micro-business that have a business savings account have had to rely on it on over the past year due to the pandemic, but according to our recent research these savings have not been used for their original purpose.
More than a quarter (26%) of companies that do have savings in place say this is to help expand their product or service offering, while a fifth (21%) want to expand their premises. Investment in digital, technology or automation (29%) was also reported as a reason to use savings.
Encouragingly, our research also showed that micro-businesses in the UK are set to bounce back as trading continues to be on the up. More than three quarters (77%) of UK micro-businesses expect activity levels to bounce back over the next 12 months as consumer demand rises.
This in turn will boost business savings – a type of account that is becoming increasingly popular with micro-business owners. Our research found that the adoption of a business savings account was more popular amongst younger micro-business owners, with three quarters (75%) of companies owned by 18–24 year-olds confirming they had business savings in place, versus only half that number (36%) among companies owned by people over the age of 55.
When asked about the barriers to saving, the most common reasons for firms not having a business savings account was the fact they never put savings aside (38%), didn’t know the benefits of having the savings account or regularly pay into it (20%) and didn’t know how to start one (6%).
Of those that do have a business savings account, nearly a third (31%) will invest in new equipment, more than a quarter (26%) will expand new product or service offering, while a similar number (26%) will introduce new training for employees.
At Shawbrook, we encourage any business owner to have a business savings account, especially now with lockdown lifted and income streams recovering. Business savings should be a key part of any long-term strategy, as this will enable owners to fund any plans around expansion, innovation and more.
Savings also allow for more agility when making decisions and allows businesses to adapt more freely in any circumstances.
Explore how a savings account could make a difference to your business
The research within this blog is taken from consumer research of 500 UK micro-businesses with 25 or fewer employees and was carried out by OnePoll in July 2021. The research was conducted online and looked at businesses in East Anglia, East Midlands, London, North East, North West, Northern Ireland, Scotland, South East, South West, Wales, West Midlands and Yorkshire and the Humber. Of those surveyed 34% were female and 66% male.