Twice a year, we ask business leaders across the country to share their aspirations for the next six months and track business confidence. Our latest Owner Managed Business (OMB) survey carried out in November 2022 looks at the issues affecting UK businesses today.
Business confidence, which had been steadily increasing as we’ve come out of the pandemic, has fallen for the first time in 18 months.
92% of businesses claim their profits will be impacted by rising costs – with small businesses hit hardest. Almost 1 in 3 (29%) small businesses say profits will be down in 2022 compared to just 15% of larger firms (those with turnover above £1m).
The squeeze on profit margins means that 84% of businesses are looking to cut spending in the next few months. A third are planning to reduce energy usage, and a quarter will reduce spend on recruitment and marketing. 23% are looking to reduce spend on rent and other office costs, by turning to home working and hybrid working models.
With the focus on cost reduction, reducing carbon emissions has become less of a priority for businesses in 2022 – only 5% say this is a key challenge compared to 21% this time last year.
Rising inflation, interest rates and energy and fuel prices are, unsurprisingly, the biggest challenges affecting business owners this winter. More than half (55%) of businesses state they are ‘concerned’ about meeting energy costs in the next three months. Inevitably, these additional costs mean businesses are having to increase their prices to the customer. Two-thirds of businesses surveyed (69%) have either put prices up recently or are planning to do so in the next few months, although most are hoping to do so by less than inflation.
Recent political turmoil means business owners have little confidence in the UK Government’s ability to deliver economic growth in 2023. Small business owners are least confident, with 72% saying their confidence in the UK Government is low compared to just half (56%) of larger ones.
With the Government holding two UK budgets in less than two months, tax is becoming more of a headache for businesses both large and small. Corporation Tax is a key challenge for larger businesses, whereas small businesses are more likely to be worried about VAT.
Despite the economic uncertainty and additional costs, business owners remain committed to supporting their people wherever possible, with 80% of business owners stepping in to provide additional support for their teams to mitigate the cost-of-living crisis. Almost a third (27%) have increased pay, with the same number providing free meals, drinks and snacks. Other support measures include paying bonuses, encouraging paid overtime and cutting commuting or offering free transport.
You can read the full report here.
To gather the data for this report we surveyed 528 businesses with turnover between £85k and £30m in November 2022. Businesses were selected from across all sectors throughout the UK and in proportion regionally in line with ONS statistics for VAT registered and PAYE companies under 249 employees.