Small businesses in the UK are voicing urgent concerns over escalating costs, workforce challenges, and diminishing support.

The National Enterprise Network (NEN), a leading advocate for start-ups and micro-businesses, has unveiled its 2024 Business Barometer, revealing the pressing difficulties faced by the sector. The report highlights a loss of confidence in growth, with businesses expecting to raise prices and cut jobs to remain viable.

The survey found that 90% of small and micro-businesses anticipate increasing prices, with 80% expecting rises above inflation. Half of those businesses predict price hikes of 6–10%. While over half of respondents reported increased turnover in the past year, rising operational costs have eroded profit margins, limiting investment in new staff.

The cost of doing business, driven by rising wages and inflation, is the leading concern for 73% of businesses surveyed. A third fear they will have to lay off employees to manage costs. Alex Till, NEN Chair, emphasised the need for urgent action:
“We need to see some positive policies around supporting our small businesses. They are not just the backbone of our economy but the heart of our communities, where they provide jobs. Businesses are desperate for support so they can deliver the growth our country needs.”

Mounting Challenges for SMEs

The findings of the Business Barometer, conducted in collaboration with Enterprise Northern Ireland (ENI), capture the struggles faced by over 1,000 small business owners, founders, and senior managers across diverse sectors.

The survey indicates a 10% drop in the number of businesses expecting growth compared to previous years, with nearly 20% either contracting or operating with significant difficulty. Despite a modest improvement in turnover, 60% of respondents reported flat or declining profits. Rising wages emerged as the most significant cost pressure, surpassing concerns over raw materials, property, and fuel.

Brexit continues to influence growth strategies, with fewer businesses focusing on EU expansion. Only 14% of respondents plan to target EU markets, a sharp drop from 33% in the previous survey. Instead, 80% are prioritising domestic growth within the UK.

The Need for Targeted Support

A striking 80% of respondents expressed an urgent need for comprehensive support to address rising costs, secure finance, enhance productivity, and navigate technological advancements. Local Enterprise Agencies and the NEN remain key resources, with 40% of businesses seeking their assistance over the past year.

Preferences for support emphasised in-person interactions, with nearly half of respondents (48%) favouring face-to-face consultations. Networking and collaboration also emerged as critical, with 35% identifying these as top priorities. This reflects the importance of community-focused support provided by NEN member agencies, which often include access to co-working spaces.

Alex Till reiterated the call for action, urging policymakers to implement strategies that bolster small businesses:
“We must have policies now around how we sustain and support economic growth and how our hard-pressed SMEs can access the skills, training, and funding they need – as and when they need it.”

Economic and Workforce Implications

The survey underscores the economic risks posed by the challenges faced by small businesses. Rising wage pressures, highlighted by 67% of respondents, have constrained staffing levels, reversing the hiring trends observed in the previous year. With 30% of businesses considering staff layoffs, the long-term impact on jobs and economic growth is significant.

The findings also reveal that businesses are increasingly looking inward to address their challenges, with a declining focus on international markets and a heightened reliance on domestic support systems.