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Small businesses are aiming for big growth in 2022, even in the face of challenges caused by rising prices, according to a new report.
The Federation of Small Business’s Small Business Index revealed that cost pressures have hit a seven-year high, with 78% of the 1,200-plus SMEs surveyed saying their outgoings have increased. However, more than half (54%) still expect to grow their business this year. The figure is up four percentage points from the same period in 2019, before the Covid pandemic hit.
“After two years of turmoil, in which firms have once again shown their adaptability and resilience, the small business community stands ready to spur our economic recovery,” FSB national chairman Mike Cherry said. “The majority intend to grow over the coming 12 months, and many are looking to increase headcounts.” One in six increased their headcounts in the three months to December, and a similar number expect to boost staff numbers this quarter.
Staffing has become an issue for some businesses, with six in 10 saying that the tightening labour market has led them to increase wages. A third say a lack of appropriately skilled staff represents a “substantial barrier to growth”.
The FSB says more support is needed to help SMEs achieve their growth goals. “We urgently need the Government to start looking closely at the policies that will empower the small business community to spur our recovery from this recession as it did in the last,” Mike said. “The growth intentions are there, but we need the right support to turn vision into reality.
“New enterprises are launched everyday across the UK, never more so than at times like this when the economy is changing apace,” he said. “Our start-ups need funding to go on and be the employers and innovators of tomorrow.”
Throughout the pandemic, the start-up industry has reported an increase in new food-related businesses, and recent figures back up this trend. Analysis by Simply Business, a provider of small business insurance, said more and more people are turning their hobbies into careers. Home baking featured in the top 10 fastest-growing sectors, with a 24% increase driven by bakers looking to set up their own small businesses.
The research revealed there was also a 62% increase in the number of online retailers and a 113% increase in market stall traders compared with 2020. The number of self-employed caterers rose 36% too, reflecting the growing popularity of outdoor leisure, food stalls and outdoor dining, accelerated by Covid-19.
“Small Businesses and the self-employed are vital to the UK economy, accounting for 99% of all British businesses – but few have been hit harder by Covid-19,” said UK CEO of Simply Business, Alan Thomas.
“Thankfully, small business owners have shown resilience, innovation and creativity at every stage of the pandemic,” he said. “And as a wave of challenges persist – from staff shortages to supply chain issues – it’s incredibly encouraging to see UK entrepreneurs leading the way when it comes to our recovery.
“Put simply, our economy and communities need small businesses to bounce back, so it’s heartening to see a new wave of entrepreneurs seizing the opportunity to start up.”