Well, nobody said it would be easy… and the rest of the year leading into 2023 will be a testing time for many businesses.
But forewarned is forearmed and business owners up and down the country are already confronting many of these challenges head on…
📌 Fall in the value of the pound
The weak pound affects all business directly or indirectly. It means that imported goods and services are more expensive, while at the same time, many consumers are cutting back on their spending. This combination is putting immense pressure on margins and profitability.
📌 Commercial rents
SME owners will face increased pressure from commercial landlords. I am already seeing many business owners, where late, missed or rescheduled rent payments are becoming less tolerated by landlords.
📌 Rising inflation
The latest data shows the UK Consumer Prices Index hit 10.1% in September and food inflation was 14.6%. The pace is quicker than was predicted and will continue to squeeze profit margins and make it harder for businesses to compete.
📌 Energy costs
Well-documented already… but in short, there is no price cap on business energy. The government’s Energy Bill Relief Scheme will however, discount the unit rate that is paid by business. So there is some protection from further price rises and will give business owners support for six months from October.
📌 Hangovers
There remain a few ‘hangover’ challenges, as a result of Brexit and Covid, which have not yet worked their way through the system. You only need to see the impact that the pandemic is still having in parts of China, to realise that supply chain issues and entrenched inflation are not a flash in the pan. The ongoing war in Ukraine will continue to have impacts for some time to come.
📌 Credit squeeze
Many creditors are increasingly pushing SMEs to repay their debts and business loans have become less advatageous. This can put a strain on already tight cash flow.
📌 Workforce & Expertise
There are very few businesses unaffected by the tightening of the labour market in the last couple of years, making growth more difficult and raising overheads. Access to outside expertise required to grow and scale a business will prove equally elusive for many business owners.