Report: Maintaining resilience in a tough economic climate
Owner-managed businesses are struggling. A combination of inflationary pressures, a cost-of-living crisis, energy price volatility and a continued uncertain economic outlook continue to present significant challenges.
This research, conducted by Kreston Reeves and the Association of Practicing Accountants (APA), a network of 20 advisory firms representing 14,000 businesses nationwide, looks at the financial health and aspirations of UK owner-manged businesses. It makes worrying and reassuring reading in almost equal measure.
The survey finds that 77% of businesses rate Government support as ‘poor’ or ‘very poor’ and expect costs to continue to rise over the next 12 months.
The headline findings:
- 90% anticipate labour costs will rise over the next 12 months.
- 89% anticipate supply-chain costs to rise over the next 12 months.
- 53% expect energy costs to impede their ability to deliver.
- 68% were either unlikely or very unlikely to make significant capital investment in the next 12 months.
- Business growth was identified as the main priority for 23% of respondents while sustaining their business was the priority for 59% and business survival for 11%.
Andrew Griggs, Senior Partner, and Head of International at Kreston Reeves, said: “There is real frustration amongst business owners but there are also glimmers of encouragement; almost half say they are in better financial shape than 12 months ago, and almost four-fifths are confident they can cope with further interest rate rises.”
The survey reports:
- 49% think they are in better shape than 12 months ago.
- 78% were confident they could cope with further interest rate rises in the next 12 months.
- Only 39% felt recruitment and retention was likely to be a bigger challenge going forward than in the previous 12 months.
“Businesses are resilient and adapt to change but from speaking with clients, there is real concern whether there is a sustainable business investment platform going forwards in these changing times. They need support from Government and their advisers to understand the options open to them as they navigate a tough economic climate. Now, more so than ever, the need for engaged advisers has never been more important.”
We work alongside and advise many businesses facing these issues. If you would like some guidance on any of the topics covered in this report, please get in touch. Alternatively, our Shaping your future hub hosts helpful content to support businesses with their planning.
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