It is difficult not to be overwhelmed by the scale of the challenges facing small businesses in 2022. The Federation of Small Businesses said only in May that more than 500,000 firms risked having to cease trading ‘within weeks’. At times like this, when costs are high, many consumers are looking for cheaper alternatives to their usual purchases but, conversely, are willing to spend a little more for occasional indulgences and luxuries. For small businesses, this presents both a challenge and an opportunity.
A recent study highlighted that among the UK’s smaller business community, three quarters are understandably worried about the cost of living crisis’ long term impact on their business. This concern isn’t helped by energy bill increases and inflation, which more than half of smaller business owners said they think will dent consumer spending, not to mention a compounded labour market that makes finding extra employees harder than usual. More than a quarter of businesses in the study also said that they feared being forced to raise prices, which in turn could make them less competitive and slow their growth.
Yet within that smaller business bracket, small businesses and start ups are often the most agile in their ability to make quick changes to their operations. With lower upfront costs and a shorter line of command to decision making, there are plenty of resiliently minded small businesses testing, adapting and reshaping their products and operations to navigate the economic hurdles ahead of them.
Our network is liaising with thousands of start ups and early stage businesses over how to best stay the course in overcoming their own unique challenges amid the cost of living crisis, and there’s no one size fits all solution. One of the most simple, no to low cost steps a business can take, however, is to make sure that the language they use to present themselves externally is as clear and representative as possible.
When consumers find your brand, they need to understand what it is you stand for – whether that is being made in Britain, being environmentally friendly, using the best ingredients or applying years of finely tuned expertise – from the moment they land on your website. Similarly, there are ways to save overheads while staying true to brand. This could be simplification of products and their packaging, for example.
The corporate world has come a long way in recent times as most companies, big and small, have made efforts to be increasingly open, inclusive and purposeful. In doing so they have softened their external image and catalysed an environment whereby customers and employees increasingly choose a brand aligned with the causes and their way of life. For smaller businesses that have a less established presence, amid a backdrop of economic turbulence, this presents a challenge.
Historically, start ups and challenger brands were the young and exciting disruptors with a natural ability to entice consumers. It is noticeable, however, how big brands are reacting to increased pressure across markets by continuing to invest in aligning their products to purpose.
In the current operating environment, where every transaction and customer interaction matters more than ever, small businesses must double down on making customers understand exactly what it is that they stand for and why the public should buy their products or services.
Start ups are far more immediately susceptible to their surrounding operating environment than bigger companies. They have, simply due to their initial scale, fewer financial safeguards and smaller pools of resource in terms of people. For many owners, it’s their first time running a business and, as well as facing a set of new challenges in the day-to-day running of a company, many are juggling the hours it takes to launch an enterprise alongside the fluctuating tightrope of a work/home balance. It is an extremely rewarding, but often high-stakes commitment even during economic growth.
Start Up Loans focuses so heavily on its support as one of the key components to overcoming the challenges of running a business is surrounding yourself with the right people. Support is offered during the application for Start Up Loans, with further help available for loan recipients in the critical early stages of operation. Our network covers the entire UK and, wherever our loan applicants and recipients are based, we have local teams and delivery partners ready to provide advice and support to help navigate the challenges today’s unpredictable landscape presents. There’s no doubt that there are challenges, but as a collective we will continue to navigate them together.