SMALL businesses in the East of England are reporting a big drop in confidence, according to the Federation of Small Businesses (FSB), as they continue to battle record inflation, rising costs, and reduced consumer spending.
The latest quarterly survey showed that confidence amongst local small firms was significantly lower than the national average, as they feel the impact of prolonged economic uncertainty.
The survey also showed that more firms reported a decline in revenue compared to those seeing revenue increase, with the trend worsening since the start of the year. Compared to other regions in the UK, the East of England was one of the weakest regions for both net revenue and future revenue, as firms battle to grow amongst increasingly strong headwinds.
Staffing levels have also stagnated, although 14% of businesses signalled an intention to increase headcount in the coming months. But wage costs continue to bear heavily on businesses, with 68% seeing salary increases over the previous 12 months.
Ann Scott, Development Manager for Essex, said “For many, many months now, small businesses have been hammered by costs rising across the board. At the same time, households have cut spending, significantly squeezing revenue. With low growth predicted for the foreseeable future, understandably our local small firms are uncertain about the road ahead”.
This is a sentiment shared by Essex based marketing agency, DV8. Their Creative Director, Dean Vale, commented: “These pinch points put a pressure on a business’s profitability and sustainability, so many businesses have ‘battened down the hatches to ride out the storm’. Businesses will happily spend on marketing when times are good, but under the current conditions many businesses do not have a reserve for marketing. As a small agency, we work closely with our clients and are agile enough to adapt, so we are seeing green shoots amongst clients that have invested, adapted, and pivoted to make the best of the opportunities out there”.
With three in five people working for an SME, FSB are asking Government to act urgently to support small firms to invest and grow. They are campaigning for an increase in the VAT threshold from £85,000 to £100,000 to cushion some of the hardest blows of inflation, preventing tax increases from exacerbating the impact of price hikes on businesses and, in turn, their customers.
Ann Scott added: “With some small businesses seeing their energy costs tripling, we are also calling on all energy suppliers to allow firms to ‘blend and extend’ their contracts so they can take advantage of lower wholesale prices. Late payments should also be a top priority, an issue that is on the increase, as unpaid invoices can stifle growth and stability.”
Owner of Essex based company Stagefrights Murder Mysteries said: “Starting a murder mystery business in 2019 seemed like a great idea, but then there was COVID. Our biggest opportunity has come through diversification of our portfolio – we now offer live events and a range of sleuthing games, targeting not only social events but corporate gatherings, job-seekers, and even high-street retailers”.
This sort of entrepreneurialism and ability to pivot to circumstances is exactly the attitude which is frequently displayed by the small business community, a sector which contributes around half of all UK turnover in the private sector.