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Exclusive: Small businesses under-prepared amid restructuring push

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Business investment could bounce back up to 4.8 per cent this year, a new forecast has suggested.
Business investment could bounce back up to 4.8 per cent this year, a new forecast has suggested.

Small businesses in the UK are feeling under pressure as mounting threats of cyber-security and economic instability push them towards restructuring, City PM can reveal.

Less than one-third of British firms feel very equipped to deal with potential business challenges, according to data from financial and risk advisory firm Kroll.

The survey of 350 senior business leaders found a clear divide between smaller companies and their larger peers, with 27 per cent of smaller companies feeling less prepared than they did a year ago.

In total, fewer than three-quarters of businesses with under £750m in revenue feel somewhat or very prepared to face current challenges, compared with 90 per cent of larger ones.

The survey comes amid growing fears over a decline in economic growth thanks to US President Donald Trump’s tariffs, which has caused many firms to forecast a tough hit to their revenue from the measures.

But businesses cited cybersecurity threats as their primary worry, with 45 per cent of companies highlighting this issue, followed by global economic instability at 40 per cent.

“Considering the domestic and international challenges, alongside the lack of targeted support and strategic guidance, we anticipate a rise in distress among smaller to mid-market businesses as they strive to tackle these issues,” said Sarah Rayment, managing director and global co-head of restructuring at Kroll.

The fears over business challenges are pushing UK firms to shake up their businesses, with 26 per cent expecting to undergo restructuring in the next year.

“While it’s encouraging to see that some businesses are planning proactively, it is unsurprising to see that smaller companies face steeper hurdles with fewer resources and capital reserves,” added Rayment.

When it comes to the motivations for restructuring, smaller companies are more affected by profitability concerns (50 per cent), competitive pressures (50 per cent) and the challenging economic environment (47 per cent) than their larger peers.

In contrast, the majority of larger companies said they were considering restructuring due to wanting to please their shareholders and investors (60 per cent).