FreeAgent's survey of UK small business owners shows optimism about the future

Despite the cost-of-living crisis, Brexit, and COVID-19, small businesses in the UK are weathering the storm.

Despite a number of challenges, UK SMEs are optimistic about their future prospects, with 77% expecting the same or better performance from their businesses in the coming year, according to a FreeAgent survey.

Business owners are also concerned about energy price rises, COVID-19's lingering effect, and uncertainty around the UK's future outside the EU, as highlighted in the findings.

The cost of living crisis

This data shows that the cost of living crisis seems to be affecting some small firms more than others. Based on survey results, 45% of SME owners say the crisis has had no or little impact on their business, while 45% say it has had a negative impact.

According to 41% of firms feeling the crunch, they have cut their marketing and advertising budgets. Only 21% of respondents think the economy will perform better than it did in the past year, despite high levels of optimism about their own businesses.

Calls for more government support

According to a recent survey, 66% of business owners feel the UK government hasn't done enough to support small businesses. Additionally, the findings indicate:

• 72% want lower taxes for freelancers and small businesses;

• 76% say the UK tax system should be simplified to help small businesses;

• 24% would like to see additional financial aid to help businesses through the cost of living crisis;

• 20% would like to see the abolition of VAT;

• 18% would like to see more pressure on banks to lend to small businesses.

Over the next 12 months, business owners say they will have to focus on:

• Cash flow (43%);

• Creating new revenue streams (40%);

• Reducing overheads (29%);

• Getting paid faster (24%);

• Exploring new markets (19%).

Dealing with late payments

According to the survey, one-third of business owners have waited up to three months to get paid by a client, while 11% have waited between six and 12 months. According to the survey, 4% of respondents waited between one and two years for a client to pay them, and 8% had a client who never paid in the first place.

Roan Lavery, CEO and Co-Founder of FreeAgent said:

"While it's positive news that our research shows small businesses are proving resilient to the turbulent economic conditions, it also highlights some key improvements that need to be made in order for them to thrive in the coming year. Late payment, in particular, is a real opportunity for the government to support small businesses, along with making tax simpler and helping them access much-needed funding."

Report says SMEs will face price hikes in the future

Enterprise Nation found in its latest quarterly survey that the number of small firms saying they'll have to raise prices has increased by 11% since 2022. Businesses plan to raise prices on average 52% of the time. The most likely sectors to increase prices are retail (76%), fashion (72%), and food and drink (67%).

Since energy costs began to bite last year, small businesses have held back, says Emma Jones, founder and CEO of Enterprise Nation. Due to the competing pressures of inflation, energy, and staff costs, the company has had to increase prices."

As expected, the cost-of-living crisis is the biggest challenge for small business owners, with 39% stating that sales have fallen because of it.