Survival of UK Small Businesses Requires Inevitable Price Rises, Reveals Analysis

Survival of UK Small Businesses Requires Inevitable Price Rises, Reveals Analysis

The upcoming quarter is expected to witness a significant surge in the number of small businesses opting to raise prices for their customers, intensifying the existing pressures of inflation.

According to a recent analysis conducted by Enterprise Nation, there has been an 11 percent increase in the proportion of small firms indicating the necessity to increase their prices compared to the previous survey in 2022.

These findings clearly illustrate the mounting cost pressures experienced by businesses, diverging from previous reports in the Small Business Barometer that indicated businesses were prepared to absorb additional expenses, such as energy costs.

Overall, 52 percent of businesses have expressed their intentions to raise prices, with those in the North East facing the highest risk of price inflation, as 65 percent of them have planned price hikes in the second quarter of this year.

Among various sectors, general retail, fashion, and food and drink are the most likely to witness price increases. More than half of these businesses will be raising prices by an average of 10 percent, while a third of them plan to raise prices by up to 20 percent.

 

The Small Business Barometer revealed that more than a third of businesses reported a decline in sales due to the cost-of-living crisis. Once again, businesses in the North East were hit the hardest, with 56 percent reporting a dip in sales, the highest percentage in the UK.

Consequently, these circumstances have led to a downgrade in growth plans for this year, with a nine percentage point decrease to 30 percent over the last quarter. Additionally, the number of businesses expecting to maintain their current status quo has increased by 11 percent, reaching 44 percent.

Small firms in the Yorkshire and Humber regions and the North East are particularly inclined to shelve their growth plans for this year.

According to the Small Business Barometer, the cost-of-living crisis has emerged as the most significant challenge ever faced by small business owners, surpassing concerns related to Brexit and the pandemic. The percentage of business owners considering it as their primary challenge has risen by eight points to reach 41 percent.

 

Giving back to the community is a prominent motivation for entrepreneurs, as indicated by the Barometer. Over a third (36 percent) of businesses are started with the intention of contributing to their community. London exhibits the highest proportion, with 44 percent of entrepreneurs driven by this purpose. In the North West, the figure stands at 39 percent, and in the South West, it is 37 percent.

 

Furthermore, one-third of small business owners also hold another job simultaneously. The Barometer highlights that 45 percent of businesses were initiated as side hustles, with the percentage rising to 70 percent in the South East, the highest in the UK. Among business owners, 32 percent currently have a full or part-time job. The education sector (37 percent) and the beauty industry (36 percent) are the most likely to have business owners engaged in additional employment alongside running their companies.

 

Article by Business Matters Magazine