The Economic See-Saw
While politicians and economists do their best to persuade, mainly themselves, that the UK economy is doing well, in reality we have already fallen into a technical recession once this year and the remainder of the year looks set for more instability. A recent economist’s report in The Times has warned that insolvencies this year could reach the highest levels since 2004.
This ongoing uncertainty is a key challenge for UK SME’s in 2024 and some businesses have been forced to shift their focus away from growth to purely survival and maintaining cash flow. A large proportion reported that they have been cutting costs through streamlining their operations and a further third or more have raised prices to compensate for reduced customer purchasing.
Consumer spending confidence can increase or disappear entirely depending on any number of factors such as fashion, competitor deals or market trends but this year one element has cast the biggest shadow, namely the cost of living crisis. Simply speaking, the ever rising cost of living means that those customers who are still buying are spending less.
Until confidence returns to the market, the additional fuel cost rises, business rate increases and wage rises will continue to attack small businesses on two fronts, with company and personal incomes being pushed down.
Across the UK there are big differences in any expected growth amongst small businesses, with the North East being the lowest at 1.5% and in comparison, Greater London is forecasted to grow by 2%. As consumers cut back on spending anything considered unessential will be the first to suffer. The numbers of these industries such as leisure firms, bowling alleys, holiday parks, cinemas etc. in each area could account for some of the disparity.
A secondary effect of this uncertainty is the availability of funding to UK start-up companies, as venture capital funding of this part of the market dropped by 50% last year. As many as 1 in 10 firms have reported that access to capital is one of their main concerns in the coming months.
So what can SMEs do in these troubled times? Well, some have made back-up or exit plans, whilst others have taken a different approach – diversify. By looking at more and varied income streams, there is the possibility of compensating for unstable demand and perhaps find a combination of offerings that will bring back some of the all-important consistent income.
Creatively Yours…
Creatively Yours Ltd helps businesses like yours succeed online through website design, website development, and our Helponomics system that offers support and training as you need it and highlights areas that could increase your sales.
For more on our thoughts please find us on our social media channels Facebook, Twitter, Linked In, You Tube, Instagram or to read our previous blogs click Here
Then why not drop us a line to helping@creatively-yours.co.uk, or simply call us on 01536 23 98 98 or 01493 718 300
