Business
Failing growth need not be the 2022 narrative for UK businesses
By Chirag Shah, CEO and Founder of Nucleus Commercial Finance
The latest monthly CBI Industrial Trends Survey UK reported manufacturing output slowed in the three months to June, while both total order and export order books also softened. Output growth is also expected to slow further in the quarter ahead, while expectations for domestic price growth fell back to a nine-month low. All in all, it’s very clear there is an uphill battle ahead as UK businesses – particularly SMEs – contend with a raft of issues and look to government for additional financial support this year.
Indeed, inflation, cost-of-living, and the potential for further rate rises this year continue to ramp up pressure for businesses – as well as ongoing shipping delays, shortages of key inputs, and finding enough workers with the right skill sets. Our own research found that nearly three quarters (72%) of business owners are concerned that the current cost of living crisis is going to affect their company in some way, while 23% of leaders even predict that their business may not survive the financial year if prices continue to soar.
Despite all these challenges for UK SMEs there is still ample room for opportunity and success – the narrative for 2022 can still be one of positivity and growth.
With careful cost management and constant innovation, small businesses can capitalise on their unique position to listen and understand what is important to consumers. Those who embrace technology to streamline their services will be in the best position to understand what their customer wants and needs quickly. The UK SME sector has the potential to be one of the most competitive in its ability to shift products, services, and business models quickly, and ultimately survive as our economy improves.
But this requires the correct and timely support.
Having further financial support packages from the government or clear routes which will help tackle skills shortages, would go a long way to ensuring more businesses can thrive this year. Indeed, the Federation of Small Businesses (FSB) recently called for such support, with their National Chair, Martin McTague, stressing the urgent need to “address rising consumer inflation at root, by taking pressure off the small firms that are doing all they can to absorb higher input, labour, and energy costs, but can only absorb so much. A fifth of firms cite input costs as their main concern. One in seven are struggling with labour shortages. One in ten are still not fully trading1.”
Whether we see further government support come to fruition via a possible reversal of the recent increases on national insurance contributions, or reductions in business rates and/or VAT charges for small firms is not yet clear. And yet, in the interim, there are several key business pressure points business owners – whatever their size – can address themselves.
Firstly, it’s a very good idea to review current suppliers to potentially start cutting down on some costs. Small businesses can also claim a tax deduction for all business-related vehicles used for work (personal vehicles are classed as anything used for travelling to and from work). This covers not just cars, but also motorcycles, vans and even bicycles. While claiming directly for fuel costs isn’t an option, this can be a way to ease transportation costs.
While hybrid working patterns may have an impact, reviewing the workplace premises or office can also be a way to reduce costs, particularly if they opt for a single central hub that employees can work from only once or twice a week.
It’s also a very good idea for business owners to review funding facilities and ensure they’re accessing the best type of funding with the most competitive terms, and whether the business is credible for a government-backed loan.
This last step can be crucial. According to a recent study, over 50% of UK business owners don’t know the best option for financing their start-ups – which worsens among younger demographics with 57% of owners under the age of 35 admitting that they do not know where to turn when it comes to acquiring external business finance or funding2.
Fundamentally, UK businesses won’t be able to grow successfully if the finances are not well maintained. In doing this, it greatly reduces the chance for things like financially induced stress to occur, which could distract from the key objectives and achieving sales targets. Business loans, such as those offered by Nucleus, are available for a variety of business types and needs, and the extra finance has the ability to help companies reach new targets, bolster growth, or cover any funding gaps.
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