Inflation remains the top risk faced by small and medium-sized enterprises (SMEs) in 2024, according to an Allianz Commercial survey involving 500 SME decision-makers.
Key threats to SMEs include inflation and the cost of living, with 61% of respondents feeling threatened. The state of the UK economy also causes concern for 51% of the SMEs surveyed, reflecting an increase over last year’s 33%. Additionally, worries about cash flow have nearly doubled since 2023, now troubling 31% of respondents.
This year’s poll also revealed that 75% of SMEs have been negatively impacted by the cost-of-living crisis, an uptick from 71% a year ago. Meanwhile, Brexit concerns have receded.
The major challenges SMEs anticipate in 2024 include high energy bills, cited by 37% of those polled, and competitive pressures, noted by 36%. Other significant challenges are issues with late payments or unpaid invoices (28%), supply chain disruptions (24%), and workforce management issues such as hiring and retention (24%).
From an insurance perspective, despite the looming threat of inflation, only 19% of SME owners have raised their sums insured and a mere 12% have extended their insurance indemnity periods. Notably, 42% of SMEs owning their premises are unaware of their property’s rebuild value, and of those who are aware, 51% derived their estimates from professional valuations.
Alex Ktenidis (pictured), director of digital trading at Allianz Commercial, noted: “SMEs are clearly facing extremely challenging times, so it’s understandable that business owners are looking to save where possible. Having the right level of insurance protection is crucial, and brokers play a pivotal role in assisting small business owners to fully understand which insurance cover and indemnity levels are needed.
“We know that SMEs are incredibly agile, and many of them adapt their business models to suit the ever-changing environments that they operate in. Working with brokers, we want to provide the best support possible to those customers so when they make significant changes we can help make sure this doesn’t lead to gaps in their cover.”
Conducted by One Poll on behalf of Allianz, the study also found that 21% have expanded their product or service offerings in the past year while 14% shifted to home-based operations. The same percentage saw an increase in headcount. Moreover, a significant 51% of SMEs see potential benefits from adopting artificial intelligence and 23% from machine learning.
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