Business1.5 million small business owners will be forced to use personal savings...

1.5 million small business owners will be forced to use personal savings to prop up business

  • A quarter of UK small businesses will cease trading if economic outlook does not improve
  • One third (36%) say they will increase prices by up to 20% in order to survive the cost of living crisis
  • Over 1000 small businesses took part in the SME Insights Report, forming a comprehensive picture of the health of SMEs in the cost-of-living crisis

25th July – London: More than a quarter (26%) of small business owners in the UK believe that they will be forced to cease trading if the outlook for their business does not improve. In order to combat grave financial conditions, 1.48 million of the UKs 5.5 million SMEs are considering using personal savings to prop up their business.

The SME Insights Report, published by small business insurance provider Simply Business, found that 48% of SME owners believe the rising cost of living is the most glaring challenge facing their business, with a further 63% saying that rising taxes, interest rates, and inflation are eating into profit margins.

The findings, collated using the responses of over 1000 small business owners, shows that small businesses are caught between a rock and a hard place – being forced to increase their prices at a time when many consumers are cutting down spending. Nearly half (47%) of UK SMEs say that they intend to raise prices by up to 10%, with a further one in three (36%) increasing prices by up to 20%. The UK’s cost-of-living crisis has compelled businesses to constantly be looking for ways to stay afloat.

SME owners also cited rising energy costs and a lack of government support as the key challenges they are facing. Over a quarter (26%) of SMEs are now spending up to 40% more on energy each month compared to the previous year, with some reporting an astonishing 150% increase in their monthly energy expenses.  

Annelise Sealy, owner of The Fall Bride in Hackney, east London, said “Our building is modern spec, well-insulated, and our energy output is minimal. We don’t use any energy-intensive equipment and we run everything as efficiently as possible. And yet, over the course of the past year, our monthly bill has fluctuated between £100 and £1100 despite us doing nothing differently. 

“The Government also needs to address the issue of taxation on small businesses. A blanket increase which does not consider industry, size of the business or turnover is not thoughtful or effective.” 

Jonathan Portes, Senior Fellow of the Economic and Social Research Council and Professor of Economics and Public Policy at King’s College London, backed the findings in the report.

Jonathan said “Two themes emerge from this report. First, the extent of the continued pressures on SMEs from the wider economic environment. While the energy price spike has abated, and labour shortages have eased somewhat, more generalised inflationary pressures mean that SMEs are being squeezed from both ends, with some input costs rising and consumer demand impacted as real incomes have fallen. Recent rises in interest rates will exacerbate both.  Second, and more optimistically, the resilience of the sector despite all this; the vast majority of SMEs remain positive about their own prospects, not just for survival but for growth, and most also expect the economy to improve.

Despite the challenging economic landscape, there remains a glimmer of optimism among the small business community. Over half of the surveyed businesses (54%) expressed confidence in the UK economy’s potential for improvement within the current year. Additionally, an impressive 77 percent of respondents expressed confidence in their own business prospects for the next six months.

Alan Thomas, UK CEO at Simply Business said “The stoic spirit of small business owners is the backbone of the UK economy – their resilience is vital to the nation’s recovery and growth. The fact that many SMEs across the UK are struggling so significantly is a serious cause for concern for the British economy and communities. 

“Naturally, the impact on consumer purchasing behaviour is trickling through to the books of small business owners at a time when SMEs need our support the most. The reduced levels of cash-flow and liquidity will only make things worse for many. Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty.” 

News Desk
News Deskhttps://www.businessmanchester.co.uk/
The Business Manchester News Desk team is a collective of experienced journalists and editors dedicated to delivering comprehensive business news and insights from the Manchester area and beyond. With a strong background in finance, technology, property, and innovation, our team ensures that our readers stay well-informed about the latest trends and developments in the business world. Through in-depth reports and insightful analysis, the Business Manchester News Desk team is committed to providing high-quality journalism to its audience.
Latest

3 Scientifically-backed benefits of whole-body cryotherapy

The popularity of whole-body cryotherapy has surged in recent years. What was once a niche recovery tool reserved for elite athletes is now accessible...

Debt is hitting mental health and relationships harder, new research finds

New data from Money Wellness shows that financial pressure in the UK is becoming more focused and more damaging in specific areas of people's...

Parfetts’ Go Local named Retailers’ Favourite Symbol Group

Stockport-headquartered wholesaler Parfetts has secured national recognition after its Go Local fascia was named Retailers’ Favourite Symbol Group at the Convenience Awards, marking the...

Estate planning expert says families should address six key questions to plan effectively

Navigating the growing complexity of estate planning can become far clearer when families focus on six essential questions, according to a senior industry specialist. Alan...
Subscribe to our newsletter
Business Manchester will use the information you provide on this form to be in touch with you and to provide updates and marketing.
Don't miss

Algeos introduces Interpod Orthotic Library for clinicians across the UK

Orthotics supplier Algeos has announced the UK release of the new Interpod Orthotic Library, a clinically organised reference designed to assist healthcare professionals in...

Fake ‘luxury’ goods worth £3 million found in trading standards raid

More than 5,000 fake luxury goods worth £3.1 million have been uncovered in Bury by trading standards officers. The huge haul was discovered in raids...

Top 10 best UK SEO agencies for small business in 2026

If you are looking for the 'absolute best UK SEO agency for a small business' right now, the short answer is Breakline. They have...

Estate planning expert says families should address six key questions to plan effectively

Navigating the growing complexity of estate planning can become far clearer when families focus on six essential questions, according to a senior industry specialist. Alan...

More News

Parfetts’ Go Local named Retailers’ Favourite Symbol Group

Stockport-headquartered wholesaler Parfetts has secured national recognition after its Go Local fascia was named Retailers’ Favourite Symbol Group at the Convenience Awards, marking the...

Top nearshore software development companies for UK businesses in 2026

In 2026, UK companies continue to experience a structural talent deficit in software engineering. The combination of high labour costs, increasing corporate taxes, and...

5 Signs your commodities pricing strategy needs an upgrade

In the volatile world of commodities trading, pricing strategy makes the difference between profitability and losses. Yet many organisations cling to outdated approaches that...