Home Business News Cash woes: Half of Britons expected to run out of money by mid-January

Cash woes: Half of Britons expected to run out of money by mid-January

by LLB Finance Reporter
15th Jan 24 8:42 am

Half (50%) of British people expect to run out of their December wage packet by the 15th of January, according to new research by leading small business insurance provider, Simply Business.

The findings signal a tough trading period ahead for small businesses as cash strapped Briton’s cut back to get by. More than three quarters (76%) of people intend to reduce their spending with small businesses in a bid to save money.

Britons struggling financially in January

Well over a tenth (14%) of Britons revealed that they had already spent their December earnings before January even started. This figure is slightly higher for women (18%) versus (11%) for men.

Almost three quarters (72%) expect to exhaust their entire December wages well before the end of the month. For Britons aged 25-34, this rises to 82%, marking this age group as the most financially strained.

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Although the 55+ age group find themselves in the best financial position in comparison to the other age groups, three fifths (61%) still expect to spend their entire December wages in January.

Only one-third (28%) believe that they will make it through to pay day with some money in the bank.

Impact on small business

Many small businesses will be facing a tough trading period as consumers tighten their belts after the holiday season.

Over three quarters (76%) of people intend to reduce their spending with small businesses this January in a bid to save money, with dining out (49%), buying new clothes (44%), visiting coffee shops (36%) and pub outings (35%) topping the list of anticipated cutbacks.

Despite widespread cutbacks, image conscious Britons were most reluctant to compromise on grooming, with almost a quarter (24%) willing to forgo their hairdressing appointments.

Nevertheless, a resilient quarter (24%) of respondents remain dedicated to supporting local businesses throughout January despite the financial pressures.

Alan Thomas, UK CEO at Simply Business: “The stoic spirit of small business owners is the backbone of the UK economy – their resilience is vital to the nation’s recovery and growth. The fact that many SMEs across the UK are struggling so significantly is a serious cause for concern for the British economy and communities.

“Naturally, the impact on consumer purchasing behaviour is trickling through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many. Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty.”

Daniele Paduano, owner of Kotch! Pizza in Stratford, London said “We believe the worst time for trading is between January and March. Our action plan is to focus on more food offerings during the week to keep our customers engaged during this quiet period, promote new specials, and increase the number of pizza masterclasses we do monthly – which has been very successful so far. Sadly, we cut hours and costs in general when necessary, but creating new revenue streams is our priority more than cutting costs.”

Larnia Ryder, owner of e-commerce and retail brand Ryde, said, “As an eCommerce and retail brand, trading can be unpredictable – in 2022, January was our highest-ranking month whereas this January is already our lowest turnover since we started Ryde.

“My personal take is that people are being careful with spending and the usual Christmas money is sadly going towards more practical things such as bills.

“There’s always an element of risk in owning a small business and an unstable economy is part of the parcel. I’m currently exploring avenues such as crowdfunding for our next product launch but on a more practical level, to sustain the business ‘given the worst’, we would have to consider a loan and/or taking on another form of employment or part time job. It’s not an ideal situation as running an SME is definitely a full-time job, seven days a week.”

Navigating financial challenges

To bridge the gap until their next pay check, over one third (36%) of respondents revealed that they will be forced to tap into their savings, one third (31%) will have to utilise credit cards and one in five  (22%) will be going into their overdraft.

The bleak financial picture impacts directly on small businesses, with one quarter (27%) of small business owners reporting they will have to dip into their own personal savings. Almost one in five (19%) will be forced to cut products and services in order to cope during periods of reduced consumer spending, according to Simply Business’ SME Insights Report.

Top cities feeling the pinch

Among UK cities, Nottingham is revealed as the most financially strapped with 82% of its residents expecting to run out of funds in January, closely followed by Sheffield (81%) and Glasgow (80%).

While Brighton emerges as the city with the highest number of residents expecting to retain funds in January, half (50%) of Brightonians still expect to spend the entirety of their December wages by the end of the month.

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