iscover
iscover 
As revealed in ScotPac’s SME Growth Index Report, if businesses lost a key client, there would be an average revenue loss of 22 per cent.
Diversifying revenue streams is key to the survival of small businesses, said ScotPac CEO Jon Sutton.
“This feedback tells us that too many SMEs are just one shock away from collapse. Relying heavily on a single client or supplier can create serious vulnerability – especially in a volatile trading environment,” Sutton said.
“In challenging conditions, businesses that diversify their client base and secure flexible funding are the ones that survive and thrive.”
The last year has seen the highest insolvency levels in over a decade, said Sutton.
A total of 3,306 companies became insolvent for the first time in the first quarter of 2025.
The key drivers of this were rising costs, aggressive debt collection, and weakening consumer demand.
The construction industry was hit hard, with 2,600 insolvencies in the financial year to March 2025. This was a 25 per cent increase on the previous period.
Hospitality was recognised as another struggling industry as consumer spending tightens.
Business failures are likely to continue as 59 per cent of SMEs predicting declining revenue growth are now in full contraction. This was three times than in 2019.
As highlighted in a recent Broker Daily article, SMEs need brokers more than ever as cash flow challenges continue to place strain on the sector.
Two-thirds (66 per cent) of SME respondents said they’ve experienced cash flow stress in the past year, while 13 per cent said they have no cash reserves at all.
Prospa urged SMEs to invest in technology to free up time to focus on growth.
“Technology is no longer a luxury – it’s a necessity. AI is helping small businesses do more with less, freeing up time and resources to focus on growth. But adoption, particularly if you are competing with larger or global businesses, needs to be higher,” said Prospa’s co-founder and chief revenue officer, Beau Bertoli.
“Small businesses are showing incredible resilience and adaptability. It’s been a tough time for many, marked by sleepless nights and dipping into personal savings – but I’m continually impressed by how business owners are embracing technology and finding smarter ways to operate.”
[Related: Cash flow crunch: Why SMEs need brokers more than ever]
