Research by Oracle NetSuite finds that the majority of business owners are looking on the bright side despite economic challenges ahead
The cost-of-living crisis, rising interest rates, inflation and skyrocketing energy bills have given UK businesses cause for concern. Yet, despite the economic backdrop, the majority of Britain’s small businesses are looking ahead with rose tinted glasses.
UK business owners and workers are more optimistic for 2023 than they were last year, according to a new study by Oracle NetSuite. The study, which surveyed more than 2,100 UK business founders, revealed their outlook on the future – and plans to counter the tough economic challenges. 71% of founders are more optimistic about their business prospects in 2023 than 2022 and 47% expect their business to grow, the research shows.
64% of UK workers have ambitions to start their own business in the next two years – and 70% would encourage others to start a business right now. Gen Z founders are most optimistic about this year, research shows, with 92% believing business prospects are better in 2023 than in 2022 – and 81% expect their business to grow over the next 12 months.
There are several key reasons workers want to start a business, according to the study. The top reason is to become their own boss (53%), gain more control over their lives (48%), challenge themselves (37%), and become wealthier (35%). ‘Side hustle’ culture is also growing with 27% – and 45% of Gen Z – workers currently having a separate source of income to their main job.
Despite their optimism, UK business founders are still bracing for tough times ahead – and many are trying to counter challenges by focusing on profitability and pricing. The top challenges founders are mitigating against include rising costs and inflation (62%), increasing energy costs (50%), and the knock-on effects of a recession (48%). To address these challenges, founders have shifted their priorities and will be focused on improving profitability (44%), managing costs (41%), and growing revenue (38%) in 2023. To help improve profitability, 42% of founders plan to increase the price of products and services by up to 10% this year, with 21 percent noting they plan to increase prices by up to 20 percent. Only 18% of founders said they will not raise prices in 2023.
With a challenging economic forecast, 72% of UK business founders said using cloud technology has helped them navigate obstacles. Founders said the top three benefits of cloud technology include being able to run their business remotely (29%), being able to conduct accurate financial reporting (25%) and being able to automate processes like payroll and invoicing (23%). UK business founders that are not using cloud technology are 18% less expectant of business growth in 2023 compared to counterparts using cloud technology, and 21% less likely to have a positive outlook, according to the research. Workers who may be looking to start their own business also recognise the importance of cloud technology. In fact, 89% believe cloud technology will play a key role in the success of a new business.
“It’s encouraging to see so many business founders and workers looking positively at the year ahead,” said Nicky Tozer, EMEA SVP at Oracle NetSuite. “Our study suggests that founders are adapting to the persistent risk posed by inflation and recession by doubling down on productivity, the use of cloud technology, and meeting pricing pressures head on. The UK’s entrepreneurial spirit is shining brightly, as evidenced by the quarter of workers currently bringing in additional sources of income to their day job.”
Jack Lewis, Founder and CEO of Sowvital, an Oracle NetSuite customer, launched his business after spotting an opportunity during the pandemic to help people care for house plants. “As founder of a business in a relatively niche area, we see huge opportunity and reason for optimism in 2023. People are applying the pandemic-related mantra of ‘self-care’ and home improvements to more areas of their lives, including house plants. The idea has proven fruitful, but now it’s about execution and scaling. Key to supporting that is the system we use to run our business. We adopted an ERP system less than a year into launching so that we could make effective use of data to make quick decisions that will help our business grow. In this environment, execution is everything. Make sure you have the right partners.”