Alan Thomas, UK CEO at Simply Business, one of the UK’s largest providers of small business insurance, commented on the state of the economy for small businesses in 2023, in light of the recently published SME Insights Report by Simply Business:
“The unfortunate reality is that SMEs across the UK are struggling. Despite small business owners remaining overwhelmingly optimistic in the midst of the challenges they are facing, their struggles should be a serious cause for concern for the British economy and communities.
“Our recent SME Insights Report found that UK small businesses are owed £32.1 billion in late payments, which is a serious cause for concern for the British economy and communities. At the same time. Over a quarter (26%) of SMEs are now spending up to 40% more on energy each month compared to the previous year, with some reporting an astonishing 150% increase in their monthly energy expenses.
“As a result, over a quarter of SMEs are considering resorting to using personal savings to prop up their business and nearly a third of businesses are seeking bank loans.
“The findings demonstrate the very real challenges and concerns faced by the nation’s SMEs, not least the cost of living crisis that has forced many consumers and businesses to cut spending. As the cost of running a business continues to soar, SMEs are having to negotiate knock-on effects such as price rises, reduced services, and delayed expansion plans.
“Naturally, the impact on consumer purchasing behaviour is trickling through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many. Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty. The UK’s 5.5 million SMEs account for over 99 percent of all businesses and will be crucial in helping the economy to recover from a turbulent period.
“The current period of economic uncertainty, fuelled by high inflation and rising interest rates, has immediately followed the Covid-19 pandemic. In reality, there’s been no respite for business owners who have had to remain in survival mode for the last few years. There’s no doubt that these challenges have unfortunately taken their toll on business owners.
Despite this, confidence among SMEs remains high – showing that small business owners remain as durable and versatile as we’ve come to expect. Looking ahead, half of SMEs (54%) – from sole traders all the way up to bigger businesses with more than 10 employees – expect the UK economy to improve this year. Meanwhile, over three quarters of SMEs (77%) are feeling confident about their prospects for the next six months.
“The stoic spirit of small business owners is the backbone of the UK economy. Time and again, SMEs of all sizes show they can remain successful in the face of adversity. It’s never been more important to support small businesses, and we’re delighted at Simply Business to have just launched our £25,000 Business Boost grant. The competition is designed to give one UK small business a helping hand in the face of wider economic challenges. It’s our fourth iteration of the competition and I’ll be joined by a panel of expert judges from the world of business to help pick our final winner.”