Nearly 85% of seasonal businesses in the UK are being forced to secure extra finance in order to fill gaps in their cash flow, according to a research conducted by the NatWest Great British Entrepreneur Awards and Esme Loans.
The survey uncovered the lengths that business owners are willing to go to in order to avoid taking out a business loan. In total, just 15% of respondents said they have secured business loans. Business overdrafts are the most commonly used (21%) with a further 7% making use of their own personal overdrafts. Five per cent even resorted to taking out personal loans and another 11% said they took out loans from friends or family.
Commenting on the number of people opting for overdrafts and even loans from friends and family, Veronika Lovett, marketing director at Esme Loans, said: “People shouldn’t be nervous or scared about borrowing for business needs, especially given how comfortable many are borrowing for personal ones.
“We believe that no hard-working business should have to work hard to get a business loan, which is why Esme Loans was founded. Our hassle-free, paperless application takes just 10 minutes and once approved the funds can be in you account within the hour.”
Francesca James, founder of the NatWest Great British Entrepreneur Awards, said: “These results really highlight how difficult life can be for seasonal businesses, with so many having to find extra cash to fill their cash flow gaps. It’s startling to see how many are risking their own personal finances, rather than applying for a business loan.
“We’re delighted to be working with Esme Loans to shine a spotlight on this issue, and to make entrepreneurs aware that applying for a business loan doesn’t have be longwinded, time and paper-heavy. It’s vitally important that they realise there are quicker, easier options.”
Perhaps unsurprisingly, over a third (36%) said cashflow was the biggest issue they come up against when adapting to seasonality. Entrepreneurs also said that managing stock (22%), staffing (21%) and planning (20%) were their biggest problems.
The research suggested that business owners resort to a range of actions to cope with the seasonal lulls that their business experiences. It seems that reducing costs is more likely than taking steps to boost sales for many seasonal companies. Reducing expenditure was the most common reaction (22%), while one in five reduce their staff numbers. Seventeen per cent said they diversify their products and offer discounts or promotions, respectively.
Given that cash flow is the biggest concern for seasonal business owners, it’s no surprise to see that better cash flow was highlighted by 42% as the thing that would make the biggest difference in managing seasonal peaks and troughs. Greater efficiency (16%), access to flexible workers (15%) and flexible payment terms with suppliers (15%) were also suggested as ways to help.
For more information on Esme Loans visit: esmeloans.com.