The accountants believe that the first priority for companies should be to make sure they are well funded. Photo: Getty

Almost six in ten (59%) small business owners said they used their own money in the past year to keep their businesses alive as they faced widespread closings due to the coronavirus pandemic.

Small business owners are increasingly concerned about the profitability of their business, and nearly four in ten (38%) are concerned that they are, according to a study conducted exclusively for Yahoo Finance UK by one of Europe’s largest small business lenders – iwoca do this have to close this year.

A separate survey conducted over the same period asked accountants representing over 23,000 small businesses across the UK to find out what their clients should be focusing on in 2021.

It turned out that the accountants believe that the first priority for companies should be to make sure they are well funded.

The second most cited priority, which logically seems to follow the first, was making sure bills were paid, with 48% of respondents saying so.

Almost a third (31%) said diversifying product offerings would be critical for businesses in the coming year, while 28% said using government systems would be key to survival.

More than a quarter (26%) said the move to online should be a focus for many companies in the coming fiscal year.

When SMB owners were asked the same question, the majority (60%) said they will focus on making sure they are well funded in 2021. Still, four in ten (43%) expect to have to use their own money to fund their business this year.

Colin Goldstein, iwoca’s Commercial Growth Director, said, “Using your own money to fund your business is clearly unsustainable for most people.

“The overall message from both accountants and our survey results is that entrepreneurs need to make sure they are financially well prepared for the difficult year ahead. As we continue to have national restrictions, it is important that SMEs have access to business credit when diving into the own pockets is simply not an option. “

The story goes on

Alastair Barlow, founder of flinder, a London-based accounting, consulting and data analysis company, said, “It’s pretty typical for small business owners to start their business with their own money, but it gets stressful to keep putting personal funds into that To keep business alive.

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“While it seems like an easy path to go, it’s unlikely to be most relevant to funding the business. Cash flow for small businesses has always been a challenge, and 2020 has the short cash reserves that most small businesses operate under , both highlighted and sharpened.

Barlow notes that understanding and optimizing working capital when cash is limited is an important business skill – knowing where cash is tied up and how it can be converted into actual funds in the bank.

“Whether this is paid for faster by speaking to customers regularly or understanding which stocks are moving slowly and leading less of them, working capital management can really help a company during an unprofitable (or pandemic) phase,” he continued.

“All businesses, large and small, need to have a clear view of cash flow in order to be able to make informed decisions today and help themselves tomorrow. Cash flow forecasts are essential to understand future cash needs and any gaps, to plan early and to be able to speak to the right people. “

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Iwoca has now distributed £ 280m through the government’s Coronavirus Business Interruption Loan Scheme (CBILS) and launched iwocaPay in June 2020.

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