Pleo, the smart spending solution for small to medium-sized companies, today launches its ‘State of Spending 2023’ report. The report reveals how careful spending is on the cards, with nearly half of UK businesses hoping to get a better handle on reducing their spending in 2023.
As UK economists still predict economic uncertainty, nearly two in five (39%) of those SMEs surveyed are concerned their business will close this year unless more financial support is made available.
Against a backdrop of fewer than half (45%) of UK businesses being ‘recession-ready’, Pleo’s report reveals that significant spending cuts are looming – with 43% reporting their staff might have to take pay cuts.
Worse still, 42% of businesses fear they will have to let a significant proportion of staff go in 2023 (56% for those with less than £1 million in revenue). In terms of recruitment, 44% are unlikely to have the financial ability to hire new staff this year. Indeed, to ensure their business’s survival over the course of 2023, 41% will be scaling back or closing in some markets and focusing on those most profitable and/or those that offer the most potential.
Whilst some government support is still in place but slowly being scaled back, most notably the energy support scheme, many business leaders don’t feel enough is being done to support them.
According to Pleo’s new findings, factoring in the support the government is already providing – such as price caps, tax relief and private loans – business leaders have indicated that this will help them survive for only five months. Yet when asked how long they see the current economic crisis going on for, most businesses said a year.
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Almost half (48%) reported that they want to get a better handle on managing their spending in 2023 – spending less on staff niceties, such as work perks, socials and staff gifts, but increasing investment in initiatives that will bring tangible value to the business, such as staff training and software investment.
Businesses believe the most valuable assets that will help drive down costs during this challenging period are: better access to financial technology to improve efficiency (37%), better access to talent to improve skill sets across the workforce (36%), easy access to cash support such as loans and credit to improve cash flow (33%) and improved government financial support (30%).
Abigail Slater, UK Country Manager at Pleo, said: “For the majority of UK businesses, and those across Europe, the next 12 months paint a mixed picture. Despite the challenges businesses are set to face in 2023, the current difficult period also presents an opportunity to prepare for situations that might otherwise take a damaging toll.
“We’re still on relatively thin ice with forecasts from the likes of the Bank of England & OBR still indicating the coming months will be challenging. With the economy’s position not quite as bad as early predictions, now is an ideal time for senior decision makers to focus on solutions and tools available to help navigate through what still could be a tumultuous year.
“From business leaders we have spoken to, 48% are determined to get a better handle on their financial health and spend management, which is great to see and clearly shows that there is still a desire to tackle these issues head-on in uncertain financial times.”