Throughout the UK, there has been an increasing rise in energy and fuel prices that seem to be affecting everyone in different ways. One of the most significant groups of people that they are affecting is small businesses across the country. The increases in price are posing a threat to the survival of small businesses.
An SME Insight Report was carried out recently by Simply Business, and after surveying 1000 small business owners in a bid to discuss what their concerns are and how optimistic they are about the future; it was discovered that more than half expect they will be forced to increase prices in order to compensate for the increasing cost of energy. Many business owners are worried about this increase in Energy Price as they believe it could well lead to fewer customers and their eventual collapse.
What Are Some of the Biggest Challenges that Currently Face Small Businesses?
The insight report that was carried out made a point of highlighting some of the biggest challenges which businesses face in 2022 and 2023. These include:
- Rising costs across the board. 70% were concerned about the rising price of everything, whereas 54% actually specified they were worried about the rising energy and fuel costs.
- 36% of business owners confirmed that they were particularly worried about tax and hikes in national insurance.
- 26% of people confirmed they were worried about marketing and how they are going to be able to find customers.
- 22% said they were worried about a lack of funds or the inability to gain access to credit.
- 18% of small business owners are worried about whether or not they are going to be able to recover from losses that are related to the pandemic.
There are different tactics that small businesses can put in place in order to cope with these threats, and whilst these may work for a bit of time, there is only so much that individuals can do before it all becomes too much.
Can Changes to the Energy Price Cap Help Small Businesses?
A lot of businesses would likely benefit from some form of financial support, but this isn’t the only lifeline that could be given to small businesses. Many small business owners have commented on how they would like to see the government take action to address the rising energy prices and increases in taxes. The points raised specifically by small business owners include:
- Three in every five would like the government to take the time to review the energy price cap with the intention of reducing it.
- A fifth of all business owners is interested in the government reviewing or extending the VAT cut.
- About 12% of people (just more than one in ten) would like the government to have a look at national insurance either to review or reduce it.
There are millions of small businesses struggling thanks to the rise in energy prices. Not only this, but as energy bills continue to increase at a time when costs continue to rise in most operational areas, this creates the perfect storm when it comes to a company’s survivability.
Rising energy bills don’t start and stop with businesses as households across the country are being hit with higher energy rates, and thanks to inflation, everyday items are becoming a lot more expensive too. This means that not only are businesses’ operational costs increasing, but fewer people are making purchases because they are cutting back on spending that they do not deem to be essential.
When you consider the above, small businesses, especially those who operate within the world of food and drink, retail and hospitality, are at risk of losing out on revenue and income at a time when it has never been more important.
Issues Surrounding Access to Funding
There are wider challenges that continue to affect businesses. The report carried out also found that around a fifth of businesses were unable to gain access to sufficient funds, and this, paired with an inability to access credit, could lead to their eventual closure. Thanks to the pandemic and now rising energy prices, on average, businesses have lost around £20,000 each over the past 2 years. Just because covid restrictions have dropped does not mean these issues simply go away either, as there are a number of organisations that continue to suffer financially.
Light in the Dark
Despite the fact that there are a lot of businesses who have hard times ahead in the face of recovering from covid and problems surrounding increasing energy bills, small business owners still remain hopeful about the future. In the same report, it was confirmed that 70% of businesses were confident about their future, 22% confirmed they were very confident, and a third of people said they felt better about the future than they did 12 months ago.
When you compare these levels of confidence to what they were like during the pandemic, there is a clear contrast in attitude. Towards the back end of 2020, one in five of all organisations said that they didn’t think their organisation would be able to survive and make it through the lockdown. It could well be the case that going through these hard times and coming out on the other side has instilled optimism in people, making them more confident about facing the tough times ahead.
Does Your Business Need Help in These Tough Times?
There is no getting away from the fact that businesses have some difficulty lying ahead of them as energy prices rise and people begin to spend less as well. As such, it may be the case that your business needs some kind of assistance, either with loans to help you through this period or options surrounding liquidation. If this is the case, then consider enlisting the help of Simple Liquidation. Our team of experts are on hand to help you with any obstacles you are currently facing. If you have any questions or want further information on how we can help, please do not hesitate to get in touch.