Welsh small businesses focused on cost control as growth outlook falls

The percentage of UK small businesses in Wales predicting growth has hit its lowest level in two years (22%) according to Novuna Business Finance.

With the current economic climate, small businesses in Wales have presented concern with a significant drop in growth predictions on last quarter (29% - down 7%). Meanwhile, there was also an increase in those businesses predicting contraction or potential closure (30% vs 18% national average) – exceeding growth prospects for the region and making Wales the area most likely to scale down or struggle to survive.

These findings come from Novuna Business Finance’s Business Barometer, which has been tracking small business growth outlook every quarter for the last decade and provides insight on how small businesses are responding to the changing economic climate.

Plans for coming year focused on cost control

• Reflecting this less confident outlook, the ways companies were looking to grow their businesses in the next six months has focused on cost controls. Almost half (48%) were looking for ways to reduce their fixed costs (some 12% higher than the national average (36%).
• Welsh businesses were also more likely than the national average to be streamlining (10% vs 9%) or looking for efficiencies in their back office (14% vs 11%), or taking a closer look at their budgets for the coming year (23% vs 21%).
• The proportion with plans that involved actively spending in their businesses was also below the national average. This included securing new business (28% vs 39% average), expanding into new or new geographical markets (10% vs 18%), and making hires at a junior (6% vs 9%) or senior (4% vs 7%) level.
• The majority of Welsh businesses said they would be unable to operate business as usual if they could not secure funding (56%) – with plans for expansion being the most affected. This included being unable to: invest in new vehicles (13%), modernize their tech capability and purchase new machinery (16%) and expanding into bigger and better office spaces (11%).

Cost of living crisis dominates list of worries

• When it came to how the current cost-of-living crisis threatened small businesses, 92% of Welsh firms said they had concerns about how it may impact their business. Of those, their main concern was rising energy costs associated with running their business (56% vs 52% national average), being hit by rising costs by their suppliers (50%) and customers being able to spend less money with them as a result of tighter budgets (45%).
• They were also more concerned that other regions about the lack of governmental support throughout the crisis, along with Scotland, with one in four Welsh businesses sighting this as a threat to their business (28% vs 24% national average).
• Areas where they were less concerned than the nation included: paying their employees in line with cost-of-living (12% vs 27% national average), rising rent prices (11% vs 21% national average) and a rise in late payments from clients (12% vs 20% national average).

The research was conducted by YouGov among a representative sample of 1,196 small business decision makers, spanning all key industry sectors.