During the first three months of 2020, Britain’s economy fell by more than 2%, according to a recently released government report. While to some people, this number may seem marginal, what you need to keep in mind is that the economy has seen the biggest drop in more than a decade.
The last time it contracted this much was at the end of 2008 when the global economy went through a major crisis. Even though the situation isn’t hopeless, every clear-thinking business owner knows that they need to be prepared for the worst-case scenario.
Today, we’re talking to Bobby Gill, solicitor and financial advisor on how can small businesses can keep themselves afloat during the crisis with some help from an unexpected source. But before we dive deep into the subject, let’s see first, how the current recession is affecting the world of small businesses.
Understanding the Current Recession
The situation is already bleak. For instance, unemployment in the United Kingdom has been highest since 1996 and according to the country’s chancellor, the recession is very likely. In April, more than 856,000 people were fired from their jobs, which represents an almost 70% increase from March.
Although the COVID-19 situation is mainly to blame for the economic crisis, things won’t go back to normal when the coronavirus stops spreading so quickly. Bobby Gill says that these months following the pandemic are going to be especially tough on small businesses.
In a recession, even large corporations fail to emerge unharmed. Small businesses usually don’t have enough resources or manpower to go through a recession. That’s why they need to jump through multiple hoops in an effort to survive. In order to survive a recession, a small business needs to:
- Make an effort to re-evaluate and reduce its expenses
- Find a way to secure and save some money
- Adept to the needs of the market and consumers
- Keep their employees motivated through tough times
While it may come as a surprise to some, fintech can actually help small businesses survive this period by addressing all the major problems we listed above. With some help from Bobby Gill, let’s see how fintech solutions can help small businesses in the months after the pandemic is over.
How Fintech Can Prepare You for a Potential Crisis
Some recessions are mild while others are harsh. Some last for a few months, others last for years. The reality is, no one can control what happens to a wider economy. Small businesses need all the assistance they can get and here’s how fintech can help them.
1. Allow for More Finance Options
Every business needs capital to grow. They need it more than you think. Just two years ago, nearly 50% of all business owners said that they require external funds in order to give their business a boost. During a crisis like this, having multiple finance options is even more important.
Over the years, banks have worked with fintech companies in an effort to give SMB owners more options. Companies like Circle Up allow small businesses to finance themselves through a combination of credit and fundraising options.
2. Make Accounting a Lot Easier
Accounting is a huge problem among small business owners for one reason: they don’t hire anyone to help. A recent survey of small business owners revealed that half of them have never worked with a bookkeeper or an accountant.
During a crisis, business owners need to think about dozens of different things regarding their operations. As Bobby Gill says, accounting isn’t something you can slack on. That’s why you have start-ups such as TeamPay there to help you with your finance workload.
3. Help Them With Online Payments
During the pandemic, many people opted to shop exclusively online in an effort to stay away from large crowds of people found in grocery stores and retail shops. Even though things are now changed, experts tend to agree that the pandemic will have a long-lasting impact on the way people shop.
Fintech has made online transactions quicker, cheaper, and overall easier for small businesses all across the world. For example, Braintree allows small businesses to accept everything from PayPal to Bitcoin as a payment option for a low monthly fee.
4. Give More Hope and Options for Retirement
Keeping morale high during a period like this is not an easy job. Every small business manager and owner can attest to that. As Mr. Gill explains, in order to keep their employees motivated and ensure they’ll stay on board, small businesses are forced to compete with large companies on benefits.
Considering how in the past only 40% of small businesses provided retirement plans, this seems impossible. However, with the help of companies like Ubiquity Retirement, SMB’s are now able to provide their employees with retirement plans, without spending a fortune.
Predicting a recession is not that easy. By the time some information reaches the public, it’s already out of date. With a lack of information, it’s hard knowing if the recession will hit, how hard will it hit, and how long will it last. As Bobby Gill puts it, in this situation it’s always better to be prepared than sorry.
Small businesses need all the help they can get. Luckily, new fintech solutions can help small businesses survive the next few months following the pandemic. The technology is there and owners that want to ensure that their business remains afloat need to make use of it.
If not, they’re doing a disservice to themselves and to their employees as well.
About Bobby Gill
Bobby Gill, GC Wealth owner has worked in the world of law for a few decades. Over the years, he has worked with some of the biggest companies in the world, including Vodafone and Citibank. Now, more than a decade removed from his lawyer days, he is a successful financial manager for high-income clients. Bobby Gill’s GCWealth is one of the most reputable wealth management firms in the UK and has helped hundreds of clients manage their cash flow and preserve their wealth.