A recent survey by Novuna Business Cash Flow involving 500 small and medium-sized enterprises (SMEs) has unveiled a concerning reality for the business landscape ahead of the Spring Budget.
An alarming 31% of business owners anticipate the potential closure of their enterprises by the end of 2024, making the upcoming Spring budget a critical factor in their survival.
The survey results highlight the significance of the impending budget, positioning it as potentially one of the most critical in recent years. The prospect of numerous businesses facing closure is particularly sobering, especially when compared to recent statistics. According to an Office for National Statistics (ONS) report, only 3% of businesses temporarily halted trading in February 2024, and a mere 2% shut down permanently.
Challenges Leading to Closures
Since the last budget announcement in November 2023, the survey indicates that 46% of businesses reported a decline in demand for their products or services as the primary cause of reduced profitability. Contributing to the challenges, 32% of businesses highlighted the burden of increased utility costs, while 28% grappled with cash flow pressures.
Despite the challenges, there is a determination among businesses to persevere. Sixty-two percent of businesses plan to implement cost-cutting measures to sustain their operations. However, this may lead to significant restructuring, with 25% of SMEs anticipating the need for redundancies by the end of 2024.
Low Confidence in Government Measures
While businesses are gearing up for internal adjustments, confidence in the government’s ability to address their concerns is notably low. The survey indicates that 47% of businesses are sceptical, expressing the belief that the government’s plans, as outlined in the upcoming budget, will have no impact on their current predicaments.
John Atkinson, Head of Commercial and Strategy at Novuna Business Cash Flow, commented on the survey findings, stating, “This survey exposes significant concerns among business owners, particularly highlighting that 28% are grappling with cash flow pressures in these challenging economic times. It underscores the urgent need for a budget that truly addresses the needs of small and medium-sized enterprises.”
As the government prepares to unveil the Spring budget, it faces a critical juncture in demonstrating its commitment to supporting SMEs, which serve as vital pillars of the economy, contributing to innovation, employment opportunities, and overall economic growth. The outcome of the budget will not only shape the economic landscape but also determine the level of support extended to the backbone of the economy. The question looms: will the 2024 Spring budget provide the essential support SMEs need, or will it fall short of addressing their critical challenges?
