Small business Blue Monday is an opportunity to focus on employee wellbeing but this year good news seems thin on the ground as firms face a number of new costs. Alternative finance can help them manage the extra demand on capital.

The new costs that small business owners face from April include those related to the new Make Tax Digital programme and the auto-enrolment pension scheme. With regard to the former, the Federation of Small Businesses (FSB) estimates that meeting the reporting obligations will cost small companies £564 each on average in terms of new software alone.

Regarding the latter, auto-enrolment pension contributions are increasing by 3%, which will put more pressure on company finances. In addition, the beginning of April also sees a rise in the National Living Wage, from £7.83 per hour to £8.21, while younger workers on minimum wages have also seen a rise in pay.

While it is right that small businesses play their role in helping employees to save and ensuring workers are paid fairly, the bottom line for these firms is that already very thin margins are going to be stretched even further. Aside from these policy-related costs, small business owners also have to manage costs relating to cybersecurity, data protection and payment technology.

Notably, small business Blue Monday did witness some good news with regard to business rates, with smaller retailers, pubs and restaurants getting some long overdue relief. However, the FSB has been quick to stress that while this relief is welcome, it does not go far enough and that the whole system of business rates is in desperate need of reform.

So, what can small business owners do to manage Blue Monday and other costs? Alternative finance has a role to play in safeguarding business liquidity, protecting cash flow and ensuring there is capital for growth.

In the wake of prolonged caution from traditional lenders, invoice finance, asset finance, peer-to-peer lending and crowdfunding are providing small business owners with an alternative means of accessing capital for essential investment, such as in new software and hardware.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the money to buy new equipment.

And amid the market malaise being caused by Brexit, the importance of alternative finance continues to grow as easy access to affordable and flexible means of business funding is becoming ever more essential.

The small business Blue Monday costs are an untimely reminder of the remarkable headwinds that firms are facing in 2019. To survive the storm, small business owners need to be aware of all the funding options available to them, including alternative finance.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.