The last few years have been detrimental and troublesome for many businesses within the UK, thanks to the global pandemic and issues transpiring from inflation. As a result, businesses and economic leaders have had to remain resilient during these tough times in order to survive.
To assess the influence of the current cost of living crisis on UK businesses and the challenges they are presently facing, business loans specialist Nucleus Commercial Finance surveyed 1,000 individuals within the business management sector, where they relayed their biggest concerns for the growth and stability of their company within this financial year.
The findings of the study revealed that 72% of business owners are now worried the current cost of living crisis is going to negatively affect their business somehow, with 23% admitting they don’t picture their business surviving as prices continue to increase day by day. One of the reasons behind this could be due to customers no longer being able to afford their products, which 68% of the study predicted. Overall, the five biggest concerns from the study were:
- Price of fuel
- Energy expenses
- Cash flow
- Employee retention
- Transportation costs
Price of Fuel
As of lately, the price has fuel has soared and hit record highs across the country, which typically affects business both directly and indirectly. The increase in cost of fuel will likely hit certain businesses harder, such as those involved in haulage and delivery, where their services will see a direct impact. Additionally, rising fuel prices can also affect supply chains and the daily undertakings of employees.
The cost of energy bills is another major stressor to businesses in the UK, with 42% claiming it is a threat to their stability this year. In the last year, small businesses have faced a 250% increase in gas bill prices alone. Recently, the government has announced that the energy bills for UK businesses will be cut to around half of the expected level during the winter months in order to shield them from crippling expenses. The scheme will fix wholesale gas and electricity prices for businesses for six months starting from October; however, many fear what will occur after this period, particularly for vulnerable businesses that need the additional support.
Cash flow is another primary concern for business leaders, and for good reason. Maintaining a steady cash flow is vital for a business to operate successfully. Having access to cash is necessary for businesses to pay employees, fund opportunities for growth and pay suppliers. This is particularly difficult for start-up businesses or those who do not have a cash flow high enough to support them during the financial crisis. When faced with a loss of clientele and a reduction in employee retention, these businesses must be selective when spending their cash reserve. The Confederation of British Industry (SBI) has stated the trade that has seen the largest decrease in sales is the retail industry, which encompasses clothing retailers and specialist food stores – demonstrating how customers are now prioritising their basic necessities in response to the increase in the cost of living.