The strain on small businesses over the past couple of years is undeniable, battling both a pandemic and Brexit. The challenges facing owners and senior leaders have been relentless and just as business optimism began to grow amongst the small business community in January, a further pressure is now looming. Global energy prices!
The record rise in gas prices is unprecedented and set to continue to skyrocket. The highest ever increase comes due to a squeeze on gas supplies globally, increased demand around the world and growing pressures which surround Russia and Europe’s relationship. Energy companies are paying a higher price for gas and this cost is being passed on to consumers and businesses alike.
Unlike individuals and households though, there is no price cap for businesses. Meaning little protection or support is available for those who might already be struggling to pay the bills. Small businesses work within narrow margins in comparison to larger companies, which means they will be the most affected commercially.
This leaves SMEs with a difficult decision, passing costs on to customers. Ultimately, putting small businesses at a disadvantage against larger competitors.
In relation to the rise in energy prices, Sandra Rowley at card payment solutions provider takepayments.com said:
“Small businesses have had to be resilient over the past couple of years and so soaring energy prices are only set to contribute further to the struggles of SMEs.
“With an average increase of £693 per year in energy bills per household, the national living wage increasing 6.6%, hikes in National Insurance and dividend tax, this is the biggest squeeze we’ve seen in decades. The impact of this will have huge, long-lasting effects on households and businesses alike.
“Although Sunak says the government wants to make sure the support provided goes to all families, there was no mention of how small businesses will be supported at this time. Last year, 19% of small businesses had to let staff members go due to the pandemic, and with too many rising costs, businesses will need to take an even closer look at their finances.”
Though there has been nothing announced in way of support, there are existing government resources such as a regional grants and support list. This is designed to help businesses find schemes which they may have access to in their local areas.
Longer term, many businesses may look towards better insulation and green energy schemes to become more sustainable both environmentally and financially too. The business challenges report from takepayments revealed that 87% of small businesses want to see more government support to help then “go green” this year. In addition, a third stated that becoming more sustainable will give them a competitive business advantage.
In the short term however, businesses will once again need to be adaptable to ride out the current energy price crisis. However, unless further government support is announced to help support UK SMEs, the important backbone of the British economy will struggle.
For further information on the challenges facing UK small businesses read the 2022 report.
Methodology: Survey conducted by LM Research on behalf of takepayments Limited in late December 2021. The survey asked 1,050 small business owners and senior leaders about their experiences, focusing on current and future business trends.
Full data and additional stats are available upon request. Including gender, age, location and industry breakdowns.
The UK small business challenges report 2022 can be found online at, https://www.takepayments.com/small-business-challenges/