In an era marked by volatile global markets and unforeseen economic challenges, UK small businesses find themselves at the intersection of hope and uncertainty.
Recent inflation figures, despite a decrease, have reignited concerns about the economic trajectory.
But what does this all mean for the heartbeat of the UK’s economy – its small and micro businesses?
The Recent Numbers
July 2023 saw the Consumer Price Index (CPI) set at 6.8%, reflecting a decline from June’s 7.9%.
On paper, a reduction is good news. But in the broader picture, this dip is more modest than anticipated, sparking concerns among economic experts and businesses alike.
Behind the Figures
Inflation isn’t just a number. It intertwines with the daily operations of small businesses.
Many key resources, from energy to raw materials, have surged in price.
This not only strains current operations but also casts a shadow on future growth prospects.
The Ripple Effects
The wage trend is an influential domino in the inflation sequence.
Recent wage hikes, while beneficial for the workforce, may spur another inflationary wave, jeopardising the positive momentum from June’s GDP growth.
But can businesses find stability amid these rolling waves?
Small Business Sentiment
According to Martin McTague, the Federation of Small Businesses’ National Chair, confidence within the small business community took a dip in the last quarter, with inflation being a significant contributor.
Moreover, despite enduring inflationary pressures, more SMEs have experienced shrinking revenues in recent quarters than growth.
The Path Ahead
The terrain is undeniably tough. With interest rate hikes looming and affordable financing becoming a mirage, many SMEs hope that this trend of base rate rises reaches its twilight soon.
Yet, amid these challenges, they’re not merely spectators; they’re active participants, pivoting and adapting.
Government Role
Now is a pivotal moment for government intervention. Small businesses are echoing a collective call for a targeted growth agenda.
At its core? Addressing the chronic issue of late payments. Such hurdles drain resources and push businesses to seek external finance, exacerbating their financial challenges.
Practical Tips for SMEs
- Stay Informed: Regularly update yourself on economic forecasts and trends.
- Re-Evaluate Suppliers: Seek alternative suppliers if current ones become too costly.
- Cash Flow Management: Prioritise this to mitigate the impact of inflation.
- Engage in Policy Discussions: Make your voice heard in policy-making platforms, ensuring your concerns are addressed.
Small businesses access unsecured, fast funding from Got Capital. As an alternative lender, Got Capital offers financing solutions specifically designed for and catered to the needs of SMEs.
