Price increase, extension to business hours and energy savings top tactics to keep small firms afloat
Purbeck Personal Guarantee Insurance have release results of a new survey to understand the extent of the cost of living crisis on small UK businesses, as well as the measures they are taking to keep themselves afloat. The crisis runs deep, with 18% of small business owners or managers admitting to contemplating business closure in the past year. It’s sad news for the North East, where small firms were the most likely to report closure contemplation. However closure was not on the radar for any East Midland business, which gives at least some positivity to the small business world.
The most common method to prevent closure and tackle the crisis was to increase costs, which was followed by implementing energy saving measures. Near to a quarter reported changing their business hours, while 20% are looking for extra financial support either in the form of new investment or an extension of an overdraft limit. The full breakdown of measures is detailed below:
Increase prices 42%
Cut energy use 31%
Increase business hours 13%
Seek new investment 13%
Operate the business remotely 11%
Change business hours 10%
Reduce workspace 9%
Relocate 7%
Extend overdraft limit 7%
Todd Davison, MD of Purbeck Personal Guarantee Insurance said: “Small business owners continue to show immense resilience and are taking sensible measures to manage costs as a matter of survival. However, our survey suggests there are clear differences in how businesses are coping in different regions of the UK, underlining the importance of the ‘Levelling Up’ agenda.
“Purbeck’s focus is on enabling small businesses in the regions most impacted, to access funding without risk to the business owners/directors. The key issue is that small businesses must not over-extend themselves financially given the rise in interest rates and risks of signing personal guarantees for business loans. If access to new funding is vital and investors are proving hard to find, then expert, independent advice from a professional such as a commercial finance broker is critical. This will help to ensure the right loan product is secured for the business’s needs.”
Regional Analysis
- Bosses of small businesses in the North West are taking a wide range of measures to cut costs but increasing prices and cutting energy use are the most common and outside of London and the South East, small business leaders in the North West are amongst the most likely to take a pay cut. Compared to other regions however, they are less likely to cut headcount or reduce workspace
- Small businesses in the East Midlands and Wales are most likely of all regions to increase prices. More small firms in the East Midlands compared to the rest of the UK are extending their overdraft limit and this is one of the top regions to cut energy use to cut costs
- West Midlands based small firms are most likely to save costs by operating the business remotely and by cutting headcount but leaders in this region are also the most likely to be offering financial support to staff
- The bosses of London based small firms are more likely than other regions to take a pay cut as well as to sign a personal guarantee for a business loan which would put their personal assets at risk if their business fails. Worryingly, they are also the most likely to cut back on their business insurance costs
- The owners and managers of small businesses in the South East and South West are also seeking new investment and bosses of small businesses in the South East follow London in considering taking a pay cut
- Small businesses in Scotland are increasing business hours but like the West Midlands, are offering financial support to staff.
