Half of small businesses mull price rises in bid to survive rising bills and the cost of living crisis
- 70% of small business owners say rising costs are the single biggest challenge
- Small businesses are being forced to raise costs to survive
- Despite the economic backdrop, SMEs remain optimistic
Many small businesses are employing survival tactics in order to cope with the current economic environment as half plan to raise prices in response to soaring bills, according to a new report.
Small businesses across the country have faced a series of challenges with pandemic restrictions followed swiftly by supply issues and rising inflation.
Seven in 10 small business owners say soaring costs are their single biggest challenge in 2022, a report by small business insurer Simply Business shows.
Small business owners are being forced to raise prices and are even scaling back on expansion plans in response to soaring costs
It means small business owners are being forced to put together a survival strategy with almost half of the 1,000 surveyed saying they will increase their prices over the next six months.
Two in five are holding off on opening new premises with 48 per cent unlikely to hire additional employees.
‘The temperature of the nation’s self-employed is absolutely clear in our latest research,’ said Alan Thomas, boss of Simply Business.
‘With almost six million SMEs in the UK – accounting for over 99 per cent of all businesses, 33 per cent of employment and 21 per cent of all turnover – it’s vital for all of us that they can weather this summer of uncertainty and beyond.’
The majority of business owners believe that the economy is set to worsen over the next six months but, encouragingly, they remain confident in their ability to weather the storm.
The majority of owners are optimistic for the future of their business and 7 per cent even said they’re likely to start another business this year.
This level of confidence is a far cry from the levels reported in September 2020 when 17 per cent of business owners predicted they wouldn’t survive another lockdown.
Two years on, a third are more confident about their business’ prospects than six to 12 months ago, while 71 per cent are confident about their prospects this year.
‘Small businesses in the UK have had to cope with overlapping economic shocks over the past three years – the pandemic, Brexit, and now the cost of living crisis,’ said Jonathan Portes, Professor of Economics and Public Policy at King’s College London.
‘What this report shows is that despite the general economic pessimism, most businesses remain resilient. Like consumers, they expect the UK economy to worsen significantly over the next year, but they remain reasonably confident about their own prospects in the face of rising cost pressures.
‘This suggests that while the squeeze on real incomes as a result of rising energy and food prices will indeed be painful for households and consumers, it’s unlikely to result in a wave of business failures and job losses.
‘Small businesses should be positioned to take advantage of a recovery in incomes, assuming that inflation does indeed fall back as forecast over the next year.’