Recent research has shown that over two-thirds of UK SMEs are feeling less confident about the future of their business than they did 12 months ago. 

UMi, the national business support company, commissioned the survey of over 1000 business participants. 

The research also found that 40% of SME business owners are having to explore increasing consumer costs to combat inflation. An additional 36% say they are looking to reduce their energy consumption amid a dramatic rise in costs. 

Wider business costs continue to soar despite the short term relief on energy bills. A quarter of small businesses are sourcing alternative suppliers, and one-fifth of them plan to scale back plans for growth. 

Energy and utilities were identified as the primary worry among Britain’s SMEs, with 32% listing these costs as their main concern. 

22% of businesses said that staff costs were their biggest worry, and 12% said fuel costs were the most important consideration in the coming months. 

As the cost of living crisis continues to spiral and small businesses scramble to maintain a customer base that is tightening their belts, strategies have changed. 

UMi Chief Executive Nicki Clark OBE said: “As a provider of business advice, we’ve been on the front line in supporting SMEs across the UK over the past six months as they navigate unprecedented trading conditions and this survey shows just how hard our SMEs are finding things in the face of economic uncertainty.”

Businesses are struggling to adapt

Lewis Bowen, Entrepreneur and Director of Babco UK said that “recent months have presented us with a set of new challenges that have meant we have had to change our operating model to protect the business and livelihoods of our small but dedicated team.”

“Changes in customer buying habits, the uncertain costs of supplies and increasing manufacturing costs have all had an impact,” he added. 

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Heidi May, founder of independent fashion manufacturer, Aesthetic Laundry said: “In August we started to notice changes in buying behaviour, both in terms of a number of orders and in the size of the orders placed.”

Despite attempts to mitigate costs and increase sales, May said that “last month we had to make one of the most difficult decisions any small business can make and we reduced our workforce from nine to five.”

“This was necessary to protect the business but we hope, like covid, we will weather the storm and be able to grow once again,” she added.

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