SMEs call for help as ‘tripple whammy” of wage increases, export challenges and…
Small businesses across the country are urging government to honour their pre-election pledge to support the sector to enable the UK to hit future growth targets and save jobs.
The National Enterprise Network (NEN), the country’s leading representative of enterprise support for start-up, small and micro-businesses, has released the results of its 2024 Business Barometer -one of the country’s most comprehensive surveys of new start-ups and early-stage businesses.
The results show a loss of confidence in growth with almost all businesses surveyed expecting to need to raise prices and lose employees in order to survive.
Key findings include:
- 90% of micro and small business are expecting to increase their prices. 80% expect the increase to be above the rate of inflation, and half of those say they expect their prices to go up by 6-10%.
- While more than half of businesses surveyed reported increases in turnover over the past year, rising costs meant profit margins were down and they had not been able to invest in additional staff.
- The cost of doing business worried three quarters of businesses in the survey and a third said they were concerned they would have to lay off staff with 73% stating their biggest concern was rising wages.
The survey, which was conducted pre-budget before the recent announcement of an increase in National Insurance for employers, showed a lower level of confidence compared to results in previous years.
Alex Till, NEN chair, said: “We need to see some positive policies around supporting our small businesses. They are not just the backbone of our economy, but the heart of our communities, where they provide jobs. A long term decline in the levels of business support funding has combined with rising costs, in particular wages, to create a massive mountain of challenges for those small businesses we are so passionate about.
“Businesses are desperate for support so they can deliver the growth our country needs, so we must have policies now around how we sustain and support economic growth and how our hard-pressed SMEs can access the skills, training and funding they need – as and when they need it.”
NEN conducted the Business Barometer survey in collaboration with Enterprise Northern Ireland (ENI) to best understand the challenges small businesses face and the support they need to address these challenges.
More than 1,000 respondents, who included the owners, founders and senior managers of largely micro, small and self-employed businesses and sole traders from a broad spectrum of business sectors, took part in the survey.
The NEN results showed a 10% drop in the number of businesses expecting growth in the coming year with almost 20% contracting or trading with difficulty. And while 50% had seen turnover increase (an improvement on the previous year), there was a fall in those who had achieved more profit – 60% said despite the increased turnover, their profits had remained the same or decreased.
And while they continued to be worried about the cost of raw materials, property and fuel, rising wages became the biggest concern with 67% saying wages had already increased significantly above inflation. This meant they hadn’t increased staffing levels over the past year – in contrast to the previous year’s survey where 26% said they had recruited additional staff. With 73% putting rising wages as one of their biggest concerns, almost a third (30%) said they put laying off staff among their top worries.
Brexit also continues to impact growth with a significant shift in where businesses were looking to expand: 80% said they would be focusing on growth within the UK in the coming year (compared to 55% a year ago) with a corresponding drop in focus on EU markets (just 14% looking to grow in the EU, down from 33% in the previous survey).
80% said they needed support urgently across the board. And while concerns focused primarily around rising prices, they also required access to finance, business development, productivity and advice on how to benefit from new technology.
Local Enterprise Agencies or the National Enterprise Network remained a first choice for businesses seeking support, with 40% saying they had turned to them in the past year, followed by local authorities and business and trade membership bodies. Others sought the help and advice of local government departments, professional services firms such as lawyers or accountants, or a college or university.
Almost half (48%) said they preferred face to face contact with advisors and 35% chose networking and collaboration as the top types of business support they preferred, emphasising the value of community-based enterprise support delivery by many of NEN’s member agencies alongside access to cost-effective co-working spaces.
