50% Of Small Businesses Under Huge Pressure

Just under fifty percentv of the proprietors of businesses regarded as small under the Companies Act 2006 have commented that they will need to hike the charges customers are to pay as they are faced with escalating inflationary pressures, supply chain problems and the scarcity of resources.

So What Is A Small Business?

To answer this question the United Kingdom Parliament has provided a useful answer and this is contained in section 382 of the Companies Act 2006. For example, those business qualify as small and meet the following qualifying criteria if:

• their turnover is not in excess of ten point two million pounds
• they have a balance sheet which totals over five point one million pounds and
• the business employs under fifty members of the particular business workforce.

Who Did The Survey Approach?

Those conducting the survey sought the opinion of those running businesses across the entire United Kingdom and in this regard approached in excess of one thousand small business proprietors. The answers to the questions were illuminating to say the least. The report discovered how small businesses are seeking to counter the present economic situation. It explored how businesses which meet the qualifying criteria are seeking to negotiate the challenges of:

• CoronaVirus pandemic recuperation
• escalating costs and
• eye-watering degrees of inflationary pressures.

What Did The Survey Discover?

Face value the findings of the survey appeared to suggest that the business sentiment of those approached to provide their opinion to the survey reported feelings of optimism and positivity about the future direction of travel for the industry over the next half-year period. This statement was supported on the facts that in excess of seventy percent of those respondents providing answers to the questions had positive feelings of economic sentiment for the approaching half-year period and confidence, optimism and positivity. However despite the glad tidings of great joy felt by a large proportion of respondents it did little to mask the ongoing concerns of business leaders responding to the survey.

I’m A Survivor…

The report highlighted the methods such businesses are using to counteract the economic constraints in the macroeconomic marketplace by taking measures such as parking up strategies for company growth, implementing price hikes and putting respective drives for recruitment on ice for the foreseeable future. Businesses affected by these upcoming global challenges The survey highlighted some interesting ploys businesses are considering adopting in an attempt to survive in the short and medium term, for example:

• just under fifty percent of the proprietors of small businesses contemplating price hikes
• a little over twenty percent proposing to do so by between the level of six and ten percent
• a smaller proportion of small business owners (around ten percent) are aiming to rocket prices by twenty percent
• forty percent of affected businesses have postponed growing their businesses or establishing new premises for the next half-year period and
• around fifty percent have made clear that the likelihood of recruiting additional members of its workforce has been greatly diminished over the next six months
• one fifth commented that the likelihood of them buying tools, instruments and supplies and will be looking to decrease expenditure on such materials
• in excess of sixty percent of business proprietors are of the opinion that the economic conditions will decline throughout the duration of the next half year
• just under twenty percent expressed dread over another lockdown with many questioning their likelihood of survival.

Businesses need to take the results of this survey seriously so they can mitigate against the economic risks approaching down the track.

ASSESSING FIRMS

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THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES

[1] Section 382 of the Companies Act 2006 - Companies Act 2006 (legislation.gov.uk)

[2] Thomas, Alex – Simply Business – Half of small businesses forced to increase prices as they battle rising costs – Todays Family Lawyer – 21 July 2022 - Half of small businesses forced to increase prices as they battle rising costs - Today's Family Lawyer (todaysfamilylawyer.co.uk)

[3] Simily Business – Simply Business SME Insights Report - SME Insights 2022 | Simply Business | Simply Business UK

[4] Equality Act 2010

[5] Lev, Baruch et al – The Gap Between Large and Small Companies Is Growing. Why? – Harvard Business Review – 16 August 2019 - The Gap Between Large and Small Companies Is Growing. Why? (hbr.org)