Steep cost for talent forces majority of businesses to increase prices
Vistage, the world’s leading business performance and leadership advancement organisation for small and medium sized businesses, released its quarterly UK SME CEO Confidence Index for Q3 2022. The study reports that the SME business confidence index hit 75.1 points..
Over 81% of small and medium sized business leaders believe that economic conditions in the UK and Ireland have worsened compared to a year ago. Unsurprisingly, more than two-thirds (69%) of business leaders anticipate financial situations to decline further, compared to just 5% who remain optimistic that the environment will improve in the next 12 months.
Steep cost for talent
SME leaders have identified talent acquisition and retention as a key business objective in the next few months. This remains a large challenge in their ability to operate at full capacity (67%).
Almost all (94%) business leaders have observed steep rises to wages and compensation as a result of inflation. A further 89% have already, or are planning, to implement salary increases for employees this year. Only 10% of business leaders stated that they have no plans to increase staff compensation.
Sky high energy prices
A majority of businesses (51%) believe that rising energy prices will significantly impact operations, with an additional 53% expecting this to have a knock-on effect on their profitability.
In order to help navigate increases in the cost of energy and talent, most business leaders plan to increase prices of products or services (70%) or invest more into customer growth strategies (61%). Other areas SMEs are focusing on to improve revenue include:
- Developing new products / services (55%)
- Expanding into new markets (45%)
- Increasing productivity (41%)
Vistage, managing director (UK), Geoff Lawrence said: “As UK small and medium sized businesses continue to operate under economic uncertainty, we expect to see more businesses seek out guidance and advice from their peers. While the current landscape may look bleak our latest CEO Confidence Index survey suggests that businesses are taking the right steps to counterbalance the economic challenges that we’re all facing, by investing in the areas that matter like attracting and retaining top talent. With the right support in place, business leaders will be able to better maintain operations and focus attention on tackling these hiring challenges.”
