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Approximately 1.5 million UK SMEs (small and medium enterprises) owners anticipate a loss of business this year. This is due to the rising cost of living and inflation.
SMEs Surveys
Surveys have found 42% of SMEs and micro businesses view rising inflation as the biggest threat. Additionally, rising energy prices was the second biggest threat gathering 38% of votes.
This information comes in a report released by Mastercard’s Strive Business Barometer. Mary Portas, retail expert and ambassador, Mastercard’s Strive UK said;
“After struggling to stay afloat through the pandemic, the cost of living crisis is now adding extreme pressure to small businesses across every sector,”
The data’s similar to another survey done by Vodafone. Which found that staying afloat is one of the main priorities for 32% of SMEs this year.
UK consumer confidence has plunged to its lowest level since the 1970s. Meanwhile, inflation is hitting 40 year highs of 9%.
Along with this many economists fear that the current supply chain problems, Brexit and the war in Ukraine may lead to recession.
Making it more important than ever for SME owners to understand the effects of inflation and how to prepare for it.
UK tech is SMEs beacon for now
Tech firms in the UK and across the world have been making layoffs in light of the worsening economic landscape.
However, UK tech investment has so far remained healthy, with startups raising £12.4bn for the first half of the year amid a public market slowdown.
The Strive report found that businesses using technology are more optimistic about the future. 48% of businesses that use digital payments said they plan to grow in the next five years. Furthermore, 51% of businesses using social media and online advertising said the same thing.
Mary Portas says:
“As we look ahead, it’s clear that technology will play an increasingly central role in small businesses’ success – particularly for female and ethnic minority entrepreneurs who have historically faced greater challenges.”
Out of the businesses asked in the SME report, 40% said they are going to increase the use of technology in their business, with 39% saying it will be “crucial” for growing their business.
MasterCard’s report also found that 17% said funding was their biggest obstacle and 4% said it was hiring.
Despite this, 57% of UK small business owners said that they are positive about the future of their business.
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