More than a quarter of small businesses expect to fold by 2014, research finds.

More than a quarter of small businesses expect to fold by 2014, research finds.

Additionally, one in six business owners believes their company will not last even last the year, according to a new report by Francis Greene, associate professor of enterprise at Warwick Business School.

More than a third (37 per cent) of micro-businesses have found it harder to fund their business over the past 12 months and one in five (19 per cent) has no credit balance available in their main bank account, leaving them highly vulnerable.

The vast majority (98 per cent) have no intention of applying for bank loan finance over the next 12 months. Indeed, half (50 per cent) of micro-businesses rely on personal sources of finance to fund their cash flow needs and of these a quarter (25 per cent) use a credit card and 17 per cent an overdraft.

Greene says, ‘Micro-businesses are the backbone of the UK economy yet they face real challenges in surviving in today’s climate. In order to provide micro-businesses with effective support we need to understand their immediate needs.’

Greene’s report calls for existing business advice services to be better promoted to help micro-businesses access the support available, and also offers the smallest businesses some practical ways to manage their cash flow.

Suggestions include using credit agencies to check the creditworthiness of customers, invoicing within a day of the chargeable event, and charging interest for late payment.

See also: Preparing for the worst