Zurich’s recent SME Risk Index shows that business risk has reached the highest level since 2014, rising by 5% in the last six months alone.
The survey of 1,000 small to medium businesses found that 39% say that their business faces more risk today than it did a year ago. 56% of Britain’s small businesses have voiced concerns about 
the current economic climate.
A recent study conducted by Opinium found that around 370,000 businesses were planning to stop trading over the next five years, leading to growing concerns. This could lead to a potential loss of 1.8 million jobs. A further 424,000 businesses owners were planning to sell their companies, hoping to protect jobs in the process.
Causes for concern
Plenty of people will say that this is a direct result of the EU referendum uncertainty and is only set to get worse, but is that the only reason?
44% of businesses have reported a skills shortage as one of their primary concerns. A further 39% reported that red tape was a significant barrier in their businesses. As a result 8% have reduced wages for employees. At the same time businesses are struggling with a new national living wage and many businesses, even large ones like Tesco have made cut backs in hours and staff perks.
Freelancing in a similar position
Meanwhile in the freelancing world, the Association of Independent Professionals and the Self Employed (IPSE) reported that freelancers have experienced a drop in confidence regarding business performance. IPSE found that 28% of freelancers were confident in their business, a drop from 41% during the second quarter of 2015.
The main two reasons for this drop in confidence were policy related and included the government’s attitudes to freelancing and excessive regulation.
While many businesses have experienced reliefs in fees and corporation tax, freelancers have largely been ignored. Some say that freelancers are seemingly been discouraged from their work lifestyle. IPSE have pointed out changes to tax relief on travel and the stricter regulations of IR35 as two important concerns for freelancers.
Not all bad news
Despite this, businesses have adapted with 48% expanding their plans to target new customers and around 30% working to offer customers more diverse services.
While business remains uncertain, 39% of SMEs have reported growth in the last quarter which is more than the 20% who have seen a reduction in the size of their business.
Head of SME proposition at Zurich, Anne Griffiths says that small businesses are working harder to expand their reach to new customers despite the need for difficult decisions to be made. More are focusing on business growth than are cost cutting.
She said, ‘in front of a precarious economic backdrop, the SME community is demonstrating the flexibility to adapt and capitalise on their environment.’
While companies in London are most at risk of selling or closing down, in other parts of the country, business interest is growing. A recent report from Office Genie, an office space marketplace, found that the demand for office space is growing in the North West, with Liverpool leading the way.
Despite the lack of support with pensions, parental leave and changes to regulations, freelancing appears to be in a good position. More and more people are going freelance and it’s estimated that freelancers will end up making up 50% of the workforce by 2020. The freelance industry is growing at a rate of 3.5% per year and is thought to be one of the fastest growing sectors in business. It was recently reported that freelancers contribute £109 billion to the economy. Despite all the risk and the uncertainty, businesses on the whole appear to be resilient.