Half of small businesses forced to increase prices to navigate rising costs
By Rebecca Hitchon | 29 July 2022 | News
A report into UK SMEs (small and medium-sized enterprises) has revealed the survival tactics they are putting in place, in response to the current economic climate.
The SME Insights Report by UK small business insurance provider, Simply Business, surveyed over 1,000 small business owners from across the UK to discover how they are navigating rising costs, inflation and post-Covid financial recovery.
Rising costs are the single biggest challenge in 2022 for 70% of the SMEs surveyed, with 49% forced to increase prices over the next six months to cope.
The report found that just over one in five small business owners intend to raise prices by six to 10%, with this increasing to 20% for almost one in 10 SMEs.
To reduce spending, 40% of those surveyed are holding off opening new premises in the next six months, almost half are unlikely to hire additional employees, and 20% are not likely to purchase new equipment or tools.
Despite the challenging economic landscape, 71% of small business owners are confident about their business’ prospects in 2022.
Just over three in five believe that the economy is set to worsen over the next six months, but are confident in their ability to weather the storm, with 34% revealing that they’re more confident about their business’ prospects than six to 12 months ago.
Commenting on the research, Jonathan Portes, Professor of Economics and Public Policy at King’s College London, said: “UK businesses might remain resilient in the face of economic turmoil, but they need and deserve a more coherent longer-term strategy for the economy.
“Despite SME owners’ optimism, we must not be complacent in supporting them through the months ahead. Small businesses are the beating heart of the UK economy. If SMEs can’t grow, then neither can the economy.”
Alan Thomas, UK CEO at Simply Business, adds: “With almost six million SMEs in the UK – accounting for over 99% of all businesses, 33% of employment and 21% of all turnover – it’s vital for all of us that they can weather this summer of uncertainty and beyond. It’s more important than ever for the nation to support small businesses and help them not just survive, but thrive for years to come.”