It has been dominating the news agenda lately regarding the impact on households, but it’s worth bearing in mind that businesses are greatly adversely affected, too; yes, we’re referring to the continuing and intensifying crisis surrounding fuel and energy costs.
More specifically, according to the findings of a poll by a leading insurance provider of more than 1,000 small businesses in the UK, over half (54%) of SME owners regarded escalating fuel and energy costs as one of the greatest threats to their survival.
A range of concerns among business owners, but costs are the consistent theme
It wasn’t only energy and fuel that were proving major sources of financial headache for businesses, according to the SME owners quizzed. Over a third of respondents, for example – 36% – actually said tax and national insurance increases were their principal concern.
However, as a consequence of these combined pressures, 59% of the small business owners surveyed – about three in five – urged the government to review or lower the energy price cap. Meanwhile, approximately a fifth of respondents stated that there was a need for a review or extension of the VAT cut. 12% of those surveyed felt that the government should review or lower national insurance.
Seven in 10 of the small business owners questioned said that heightened costs across the board represented their biggest challenge in 2022.
49% of participants said they intended to try to offset this increased expenditure by upping their prices. About a fifth of SMEs surveyed (21%) signalled that they would put prices up by 6% to 10%, and around one in 10 (7%) of the questioned business owners indicated the increases could be as high as 20%.
Although the energy price cap is not directly applicable to businesses, it is still a concern to business owners, not least as recent escalating gas and electricity bills are eroding households’ spending power and forcing them to cut back on non-essential spending. Businesses in the hospitality, retail, and food and drink sectors – which historically depend on consumers’ disposable income – would seem to be at particular risk.
Despite the pressures, there are strains of optimism
62% – about three in five – of the business owners signalled an expectation that the economy would deteriorate over the coming six months. However, despite the backdrop, there seemed to be a level of confidence among the owners that their firms would weather the storm.
Indeed, in September 2020 – at the height of the COVID-19 pandemic – one in five (17%) respondents said they didn’t think their business would survive another lockdown. Nearly two years later, 34% now say they have greater confidence about the prospects for their business than was the case six to 12 months ago.
Some 71% of those quizzed even said they were very confident about the prospects for their firm during 2022.
Whether or not findings like the above reflect your own experiences and expectations at this time of considerable uncertainty for us all, the chances are that suitably tailored HMRC help for business in Newton Abbot, Plymouth, or Wellington could significantly help your organisation to survive and thrive.
For a more detailed discussion of the possibilities for how our firms could work together, please don’t wait any longer to get in touch with the TS Partners team.HMRC help for business in Newton Abbot,