It is a well documented fact that more companies go bust coming out of a recession than during the downturn.
Rising prices will finish many businesses. The estimates for price inflation vary up to the alarming level forecast by Citgroup at 18%.
At AXLR8, we have been doing our regular checks on suppliers and clients at Companies House. There are winners and losers after the pandemic disruption.
Times are tough for some. Five of our direct competitors have been underwater by between £20k and £120k for more than three years. One is a quarter of a million under. They have carried on like that for several years. Others are part of big organisations and so it is not possible to see their performance in the specific area of software as a service (SaaS) for commercial finance brokers. The dangers of this if you are using SaaS supplier who is financially damaged for your critical operational system are grave for your business and not even a credible loan opportunity in the forecast economic climate.
Just think about energy prices in the SaaS supply chain and by extension, yours. They have high overheads in expensive mobile, expert staff and high energy costs associated with datacentres in their supply chain. This survey from Simply Business shows that inflation will hit small and medium companies. Some like pubs and manufacturers will be more affected. The SME Insights Report reveals what small business owners reported as their biggest challenge in 2022:
- 70% rising costs across the board
- (54% specifically said rising fuel and energy costs)
- 36% tax and National Insurance hikes
- 22% lack of funds or access to credit
- 26% marketing and the ability to find customers
- 18% recovering from pandemic related losses
You can see that many will have hit SaaS businesses who were in a weak position before the pandemic. Use this checklist to assess your supplier.
The ONS (Office for National Statistcs) has poor news having revised its estimate of the pandemic’s effect on UK GDP in 2020. They reckon the UK economy fell by 11%. The state that this is the biggest fall in 300 years.
So we all need to pick our customers and suppliers carefully as we emerge from the downturn and look ahead for our next opportunities. A few of our clients have expressed some concerns but thankfully not our clients in Finance. Growth does seem to be coming back now the pandemic has subsided. However, in choosing partners and customers, we need to check their ability to take advantage of it.