At a glance
- Brokers eye new SME business
- Confidence may finally be returning to UK small business sector
- Zurich reports offer brokers the chance to better understand the SME market
SMEs have faced huge economic challenges in the past five or so years, and a new reality seems to have now settled on the UK small business landscape.
For brokers in this space, it has generally been about accepting what is now the ‘new normal’ and getting on with your lot.
And although there are now signs of a fragile economic recovery, a recent report commissioned by Zurich and undertaken by the Economist Intelligence Unit (EIU), entitled Adapting in tough times: The growing resilience of UK SMEs, suggests that a new ‘two-tiered’ SME economy with high-performing and low-performing SMEs is set to emerge.
“Zurich has taken the time out to understand the factors that are impacting on what is a difficult market and have produced a timely report,” said Ray Geary, a chartered insurance broker at Marshall Wooldridge.
Mainstays of economy
According to the European Union, more than 99% of the region’s businesses are, in fact, SMEs and provide two out of three of the private sector jobs. And it is this mainstay of the economy that is sometimes underappreciated by the wider public.
“SMEs will play a pivotal role in the UK recovery,” said Ray. “And although the last 12 months have been difficult with firms trying to secure the income and value of their business, and ensuring they are profitable and viable going forward, SMEs are the engine room of the economy.”
And as the UK economy finally pulls itself off its sick bed and on to an upward trajectory, there are signs in the SME sector that a recovery of sorts is now taking shape with many new entrepreneurs beginning to take their first steps in business.
“According to government figures, there are quite a number of new start-up businesses being created in the UK and, coupled with the small growth in GDP, we as a brokerage are positive as we may have reached the tipping point and can see potential for the future,” said Ray.
SMEs will play a pivotal role in the UK recovery
Ray Geary, chartered insurance broker, Marshall Wooldridge
“All of this creates opportunities for insurance broking businesses. And at the end of the day, these are aspirational businesses and we would like to grow along with them.”
Many of the incumbent SMEs, though, are still struggling to cope with the economic environment and some are becoming more resourceful to make ends meet. Another recent Zurich report found that over half of the SMEs it surveyed had admitted to delaying the upkeep of an operational asset at some point in the past two years. This, of course, could produce a short-term benefit but, equally, could lead to increased risks in the future, such as unplanned downtime and machinery failure.
“The ‘asset sweating’ report really helped us to understand the background and the risks involved, and as part of our role as a broker we very much need to educate our clients about the risks they are taking on.
“We have had some feedback from our clients, especially over insurance and the perceived knowledge gap around it, and the work from Zurich really assists us in that regard. Zurich’s Understanding Commercial Insurance Premiums document was another excellent case in point.”