By Tracy Ewen, managing director at IGF Invoice Finance

As we head into 2013, it is a good time to stand still and not only review what the last year has achieved, but plan for the year ahead. 2012 was a rollercoaster of a year for many small business owners, and they need to make sure they have as clear a picture of what the coming year may bring.

The government has, rightly, recognised that the growth of small businesses holds the key the to the growth of the economy as a whole. Despite this, recent government initiatives are unlikely to reach owner managers any time soon.

Further bad news is that 2013 is unlikely to be the year that banks loosen their rigid lending criteria for small businesses. This is in spite of 35 banks and building societies signing up to cheap capital through the Funding for Lending scheme, designed to encourage banks to lend more freely. It is important that SMEs start looking to alternative sources of funding, such as invoice finance, where they can obtain tailored advice and funding to help them grow.

For those companies that struggled through 2012 simply paying off the interest on their loans, known as Zombie companies, they will continue to survive as long as interest rates stay low. It is likely that the number of Zombie companies will rise in 2013. Economic uncertainty means that it is difficult for small business owners to predict what will happen to interest rates in the near future, and therefore difficult to plan their finances accordingly. Seeking professional advice will be able to ease this burden some what.

The bigger players in the market will be trying to build up their cash reserves and strengthen their balance sheets to impress shareholders. This will result in large companies slowing down their creditor payments to SMEs, which will only increase their pain.

Hiring full time staff becomes even more difficult and costly for SMEs as automatic enrolment makes its way to the smaller businesses. Small business owners will be reluctant to invest the time and money into bringing new recruits on board.

As living costs, such as transport, bills and food, continue to rise, SMEs will struggle to increase pay packets in line with these costs. This will make it in more and more difficult to motivate employees and retain their loyalty.

In the past couple of years the UK has been fortunate enough to enjoy a Royal wedding, a Jubilee and the Olympics. More often than not landmark events are good for business, as people go out and celebrate together. 2013 is still very much a blank canvas, but at least we can look forward to a Royal baby!

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