A survey found that ambition to grow has exceeded pre-pandemic levels among small businesses but they are being held back by rising costs, skills shortages and lack of access to finance.
According to the Small Business Index, around 54 per cent of small businesses expect to grow over the next year, up by four percentage points from 2019, which is a four per cent increase from the year before, according to the Small Business Index survey of around 1,200 small businesses in the UK at the end of last year.
According to 78 per cent of respondents, operating costs had hit a seven-year high. The survey conducted by the Federation of Small Businesses FSB found that about 40 per cent of gross profits fell over the last three months of the year because of inflation eroded margins. In the last quarter of 2021, the number of firms that had employed new workers was at 16 per cent, its highest level since the second quarter of 2015, and was the highest level since the second quarter of 2015. A similar proportion, 17 per cent, believes that there will be more staff in the first three months of this year.
The proportion of small businesses that applied for finance and the proportion that had their applications approved were the lowest for seven years: 11 per cent of respondents said access to finance was a barrier to growth this year.
The business confidence index fell to a 12 month low of minus 8.5 in the final quarter of last year, according to the poll.
Inflation, labour market shortages and tax rises in April have hampered Optimism among small businesses, according to Mike Cherry, national chairman of the FSB. He said that the government needs to look closely at the policies that will empower the small business community to spur our recovery from this recession as it did the last. He said that businesses were worried that lenders will take the same approach as they did after the 2008 financial crisis and that the bounce-back loan initiative had been a real success but was not enough to support small businesses to recover from the epidemic.
After the financial crash, banks pulled up the drawbridge for small businesses, Cherry said. With emergency loan initiatives and the new enterprise allowance at an end, it is important that this trend doesn't take hold again.