The UK’s economic landscape has been plagued by the spectre of rising inflation, exerting unprecedented pressure on the lifeline of the country’s economy – small businesses.
A recent analysis by Enterprise Nation presents a vivid picture of the swelling cost pressures and their ramifications on the business ecosystem.
Price Inflation and Small Businesses
A dramatic upswing in businesses contemplating price increases has been witnessed this quarter, intensifying the inflationary pressures.
The surge in businesses expecting to pass on additional costs to customers, as reported by Enterprise Nation’s Small Business Barometer, is a stark contrast to prior assumptions of businesses absorbing these extra costs, notably energy.
Overall, 52% of businesses are considering price increases. However, the highest threat of price inflation looms over firms in the North East, with 65% predicting a rise in prices.
Industries such as general retail, fashion, and food and drink are more likely to hike prices, with rates reaching 76%, 72%, and 67%, respectively.
With more than half of these businesses raising costs by an average of 10% and a third by up to 20%, the price increase trend seems unshakeable.
The Cost of Living Crisis
The cost-of-living crisis has become an undeniable reality, severely affecting business growth and sales.
Over a third of businesses reported declining sales due to this crisis, with businesses in the North East bearing the greatest brunt of this.
Consequently, this has impacted the growth plans for the year, showing a decline of nine percentage points to 30%, whilst simultaneously, businesses intending to maintain the status quo has risen by 11% to 44%.
Yorkshire and Humber and the North East top the list of regions shelving growth plans this year, both at 56%.
The Determined Spirit of UK Small Businesses
The trials and tribulations brought about by the cost and inflation challenges have spurred a resilient spirit among UK small businesses.
As Emma Jones CBE, Founder and CEO of Enterprise Nation, articulates, many small businesses, despite having expected a cessation in rising costs by now, are persisting amidst these stringent times, while staying committed to their communities.
This endurance and commitment underscore the resolute backbone of the UK economy – its small businesses.
The Power of Giving Back
In the face of adversity, UK small businesses are not just surviving but thriving with a purpose.
According to the Enterprise Nation Small Business Barometer, 36% of businesses are founded by entrepreneurs driven by a desire to ‘give back’ to their community.
This trend of purpose-driven entrepreneurship peaks in London, with 44% of entrepreneurs dedicated to supporting their communities, followed by the North West and the South West at 39% and 37%, respectively.
The Side Hustle Economy
The economic turbulence has also triggered a surge in side hustles, with 45% of businesses starting as side projects.
This trend is particularly pronounced in the South East, where it reaches a striking 70%, the highest in the UK.
Entrepreneurs in the education sector and the beauty industry are the most likely to balance running their company along with a job, both at around a third of business owners.
Summary
The current economic landscape in the UK presents a dual reality for small businesses – the uphill battle against rising costs on one hand, and the unyielding spirit of resilience and purpose on the other.
As we navigate through these challenging times, it’s essential for businesses to stay adaptable, lean on community support, and maintain a strong focus on their core values.
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