Heading into 2023, many small businesses are being significantly impacted by the cost of living crisis whilst battling wider economic challenges like high rates of inflation and falling footfall on the High Street.
The self-employed are feeling the pressure of the current economic climate more than most. After many months of high inflation and falling retail sales, it’s clear that many SME owners are inevitably feeling the squeeze as they struggle to pass on rising costs to their customers.
Our research has found that four in five small business owners are worried about the impact the cost of living crisis will have on their business, with a quarter (26%) worried they simply won’t be able to pay their bills in 2023.
Other concerns include the number of sales and customers available in the new year (43%), while one in three (31%) small business owners are worried about the uncertainty over inflation and interest rates.
Issues with growing supply chains is another problem, with a fifth (22%) worried about the supply and material shortages caused by the ongoing geo-political unrest.
As a result, 15% have no confidence in their business heading into the new year with the reality of the cost of living crisis also affecting the way that SMEs can prepare for 2023.
What is clear is that small businesses are in a precarious position. Their costs rise but most are reluctant to pass these rising costs on to their customers, thus severely impacting their profit margins. They are stuck between a rock and a hard place.
Sadly, we’re seeing widespread reports of SME owner’s mental health declining as a result. In the midst of the cos of living crisis, many describe how their mental health has worsened with afifth (20%) reporting battling depression. Over half (51%) reported feeling stressed, two fifths (39%) have been experiencing anxiety, while one in five (22%) struggled with insomnia.
A new year presents an opportunity for a fresh start and one which many will be craving. But support is needed at governmental level and from hard-working consumers willing to support SMEs wherever possible.
The UK’s 5.6 million small businesses collectively account for over 99% of the firms operating in the country and contribute trillions of pounds a year to the economy. The government cannot forget the crucial role small business owners will need to play when it comes to our economic recovery. With three in five SME owners calling for a review or reduction of the energy price cap, the need for more government support is clear. Action must be taken now to provide a lifeline for the sector.