Research and reports
11 August 2022
A new report reveals that the rising cost of fuel and energy is one of the greatest threats to small business survival in 2022, with tax hikes also proving challenging.
Simply Business’s SME Insights Report surveyed over 1,000 small business owners to find out their concerns, challenges, and how optimistic they’re feeling about the future.
We found that half of small business owners will be forced to increase prices to cope with rising costs, which many businesses fear could lead to their collapse.
To see more data, download our full report. Find out how Brexit has affected small businesses, as well as whether they expect to see more support from the government.
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The SME Insights Report reveals what small business owners feel is their biggest challenge in 2022:
We’ve previously revealed the survival tactics that small businesses are putting in place to cope with these challenges.
But there’s only so much that businesses themselves can put in place – many want to see the government step in with measures to help.
Help doesn’t necessarily need to come in the form of direct financial support. Businesses would like to see the government address energy prices and tax hikes:
While the energy price cap doesn’t apply directly to businesses, millions of small business owners are still experiencing increased energy bills at a time when costs are rising in most operational areas.
And with a substantial number of households affected by rising energy bills, consumer purchasing power is going down as people cut back on non-essential spending.
With that in mind, small businesses in food and drink, hospitality, and retail are most at risk of decreasing revenue and income while still in a vital post-pandemic recovery period.
Looking at wider challenges, the report also found that a fifth (22 per cent) of small businesses believe a lack of funds or access to credit could lead to closure this year.
We previously found that 87 per cent of small business owners have lost an average of £20,981 each over the last two years, with many still suffering financially.
The total cost of Covid-19 now sits at £109.6 billion, with one in six (16 per cent) believing they will never recover financially from the pandemic.
Read more in our impact of Covid-19 report.
While three in five (62 per cent) small business owners believe that the economy is set to worsen over the next six months, they’re still confident about their ability to weather the storm:
This level of confidence is in stark contrast to levels reported during the pandemic. In September 2020, one in five (17 per cent) predicted that their business wouldn’t survive another lockdown.
Analysing the report, Jonathan Portes, Professor of Economics and Public Policy at King's College London, said: “What can the government do to help? Fuel and energy prices are by far the largest concern, and here the key drivers are global. However, UK conditions have been aggravated by both Brexit and the recent fall in the pound, which further pushes up energy prices, as well as by the operation of the energy market and the price cap.
“Nor does the disconnect between the Prime Minister’s call for a ‘high wage, high productivity’ economy and the insistence that workers have to accept large cuts in real wages help to improve consumer and business confidence. While UK businesses remain resilient in the face of further economic turmoil, they need and deserve a more coherent longer-term strategy for the UK economy.”
Alan Thomas, UK CEO at Simply Business, said: “Our SME Insights Report is a clear indication that small business owners want and need government support, with three in five calling for a review or reduction of the energy price cap.
“In the meantime, whilst the energy price caps do not apply to businesses, owners are seeing their energy bills increase overall. The surging cost of fuel and energy, alongside the overall rising cost of living, will understandably see households cut back on non-essential spending. There is a domino effect in place. The impact to consumer purchasing behaviour will trickle through to the books of small business owners, at a time when SMEs need our support the most.”
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