Businesses Defy Gloomy Outlook with Plans to Succeed in Next Three Months
Despite the considerable headwinds of soaring energy prices, recession forecasts, and soaring inflation, small business leaders in the UK nonetheless remain bullish in their approach, with the majority adapting and reacting to the changing economic environment.
Research from Novuna Business Finance from the quarterly tracking study of 1,201 small business leaders found that while 34% of small businesses currently predict growth, 70% are looking for ways to try to adapt and grow. This proportion has increased from 67% at the start of the year (Q1’22).
Focus on cost control
Of these businesses, costs and cashflow have been the dominant issues to tackle – 55% said they needed to reduce fixed costs, 30% were trying to improve cash flow and 25% were trying to tackle late payment. There was also a slight increase in the proportion looking to streamline their supply chain on the start of the year (9%, up from 7%).
Dealing with rising costs was the biggest worry for small businesses fearing their business would contract in the coming months – here, 73% of respondents are desperately looking at ways to keep fixed costs down.
Investment plans remain positive
Looking at active investment, the results showed around one in eight (12%) businesses were looking to invest in new equipment for their business in the coming months, which was in line with the average for the past two years (12%). This figure increased to 26% among businesses in the manufacturing sector, up from 23% at the start of the year, and 14% of agriculture businesses (also up from 12%).
Meanwhile, around one in seven (13%) businesses were looking to expand into new markets or overseas in the coming months, again in line with the average for the past two years. This figure increased to 22% among businesses experiencing significant or moderate growth.
Around one in seven (15%) said they would be looking for additional staff in the next three months, which was only slightly down on previous quarters (18% in Q1’22, and 18% in Q3’21). The exceptions to this, however, were in the legal (26%) and finance and accounting (19%) sectors, where the proportion looking to hire increased slightly (from 21% and 18% respectively). Similarly, high hiring figures could be seen among businesses experiencing significant growth (58%), and moderate growth (29%).
Jo Morris, Head of Insight at Novuna Business Finance comments: “There has been no let up for small businesses for an extended period now, and signs on the horizon of the storms clearing appear bleak. Rampant inflation, soaring energy costs and shrinking economic growth present merciless trading conditions, all after the serious challenges presented to small businesses during the pandemic. And yet, once again, we see the resilience displayed by small business leaders in their outlook and plans to achieve growth during this time.
“Making plans to grow is often the best form of protection during a challenging period. It provides direction to navigate through the storm, and mitigates the scrapes along the way. It also puts a business in the best position to pounce on opportunities that emerge during a crisis. At Novuna, we work with small businesses to plan for the long term, not just the immediate challenges directly in front of them, helping them to grow during the good times and bad.”