The performance and volatility of the UK economy is reshaping the SME landscape for the coming year, with around two in five (39%) revealing that they have had to increase their prices to try to make sure they can keep their heads above water.
Just 13% of small/medium businesses have not yet had to make any drastic decisions or changes to their business operations ahead of next year, according to new research from fintech lender Nucleus Commercial Finance (NCF).
Not only are SMEs having to hike prices, crucially, they are having to make tough spending decisions. A quarter of UK SMEs (25%) say that they have paused investment on innovation and growth, risking significantly undermining their ability to seize opportunities when they arise in the future. Notably, one in five (20%) also say that they have paused digital/ IT investment.
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Taking a look at the other steps that business have taken, 19% say that they have moved to a smaller office, the same percentage have instigated a hiring freeze, while 18% reveal that they have given up having a physical office entirely and have switched to full hybrid working. Around one in seven SMEs (15%) say that they have taken the decision to reduce the products and services that they offer.
Despite many businesses having to make really tough business decisions, there is a notable level of optimism among SMEs that it will reap dividends. Almost half (46%) of UK businesses expect their turnover to increase by this time next year – with the figure rising to more than half (55%) of small/medium sized businesses. What must not be overlooked, however, is that just under a quarter (22%) anticipate a decrease.
Chirag Shah, Founder and CEO of Nucleus Commercial Finance comments:“Agility and innovation are both crucial for a dynamic SME sector and it’s hugely worrying that businesses across the UK are having to actively hamper their future growth potential. As the UK trundles through the economic quagmire, it’s going to need its SME operating at their energetic best in order to drag it out the other side.
“Having made some tough decisions about cutting their cloth to see them through such a challenging period, it only heightens the importance of the commercial financial pipeline. It is essential that businesses have ready access to lending so that they are able to seize growth opportunities as they pop up.”
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