Small businesses 'struggle in early stages'

Date: 31st May 2011

Small businesses might want to double check that they have access to tax advice early on.

According to recent research from NatWest, many small companies struggle to begin with if they do not have the correct tools in place to run their business effectively.

The study found that 61 per cent noted cashflow was their most significant challenge during their first year of trading, while 40 per cent overestimated their sales and 58 per cent underestimated their costs.

Furthermore, 35 per cent of firms with a turnover of less than £100,000 did not have a business plan and 63 per cent had no formal accountancy relationship.

Theo Paphitis, star of Dragons' Den, commented: "At a time when we need businesses to thrive, too many good businesses risk failure because they struggle to manage the basics early on."

Meanwhile, Peter Ibbetson, chairman of small business at NatWest, noted that businesses operating without an accountant, legal support or business plan in their first year are at a disadvantage.