The number of small businesses planning to increase prices for their customers is set to increase significantly this quarter, adding to inflationary pressures.
a New Quarterly Analysis of Small Business Confidence Conducted by small business support platform Enterprise Nation, it found that the number of small businesses saying they “should raise prices” has risen 11 percent since its last survey in 2022.
The results clearly show the increased cost pressures companies are feeling, in contrast to previous Small Business Barometer reports that showed companies were expecting to swallow additional costs such as energy.
Overall, 52 percent of companies said they plan to raise prices, but companies in the Northeast are most at risk of price inflation, with 65 percent saying they plan to raise prices in the second quarter of the year.
Across sectors, general retail, fashion and food and drink are likely to say they will increase prices.
More than half of them raise costs by an average of 10 percent, while a third are ready to raise them by up to 20 percent.
“Small businesses have been falling back since energy costs started to come to light last year,” said Emma Jones, CBE, founder and CEO of small business support platform and business support provider Enterprise Nation. Now, the competing pressures of inflation, energy costs and personnel were proving too great, and they had to make the difficult decision to increase prices.
“Many small businesses told us they felt costs would have stopped rising by now and have been holding out for as long as possible.
And despite it all, the companies are still supporting their communities. Today, more entrepreneurs are being driven by purpose and giving back through profit sharing or social enterprises, which is very nice to see, especially in these trying times.”
Small Business Barometer found that more than a third of businesses said sales had fallen due to the cost-of-living crisis. Again, businesses in the North East have been the hardest hit, according to the analysis, with 56 per cent saying sales have fallen, the highest in the UK.
That had a knock-on effect on this year’s growth plans, which were downgraded by 9 percentage points to 30 percent over the last quarter with more companies expecting to remain the same, which increased by 11 percent. to 44 percent.
Small businesses in Yorkshire, the Humber and the North East were more likely to say they would put growth plans on hold this year.
The Small Business Barometer found that the cost-of-living crisis is now the biggest challenge small business owners have ever faced, even when compared to Brexit and the pandemic, rising by eight percentage points to 41 percent.
Repeat
According to Barometer, more than a third (36%) of businesses are started by people because they want to “give back” to their community. This figure was highest in London, where 44 per cent of entrepreneurs were motivated by purpose. In the Northwest, 39 percent and in the Southwest, 37 percent said they had begun helping the community.
Side hustle
One-third of small business owners also hold another job. Barometer found that 45 per cent of businesses had started as a side business, and that rose to 70 per cent in the South East, the highest in the UK. A third of business owners (32%) currently work full or part time. Firms in the education sector (37%) and the beauty industry (36%) were the most likely to say they had a job as well as running their company.