Posted: Wed 8th Mar 2023
More than half of small business founders in the UK expect to expand in 2023, the latest Enterprise Nation quarterly Small Business Barometer shows.
Despite 77% being impacted by rising costs and 42% admitting profitability will take a hit due to cost pressures, 54% said they predict business expansion this year, a 12% increase on the third quarter of 2022.
More than 1,000 start-ups, micro and small businesses across the UK responded to the survey and entrepreneurs in London were most optimistic for growth, with 63% expecting to expand. Those operating in business services, education and food and drink businesses under three years old all stood out for their expansion plans.
Funding and staff
Half of respondents said they intend to employ new staff, and 57% plan to invest by accessing finance. Businesses expect to take on an average of £55,972 in investment, a 16% increase on the previous report and 6% above inflation.
The figure was £79,595 in London, followed by £68,250 in the South West. Businesses in the East Midlands expected to invest the least, with an average of £17,159, 22% lower than in the capital.
Emma Jones CBE, founder of Enterprise Nation, said:
"Small businesses are the most resilient people I know and it so good to see they are feeling better and brighter about the future.
"Founders are gearing up for growth through grasping technology, innovating, and planning to invest."
Business challenges remain
A drop in sales was most felt by founders in general retail (62%), beauty (61%), fashion (54%) and food and drink (54%). Those operating in business services saw the least impact on demand, with only 26% saying they had seen a fall in sales.
Entrepreneurs are working longer hours, with food and drink firms overtaking technology businesses for the first time. There's an average 50 hour working week, suggesting businesses are absorbing higher costs by working longer.
This is despite the fact that the most popular reason for launching a business was achieving a better work/life balance which was cited by 48% of respondents. In contrast, just 29% said they started up because they wanted to earn more money.
Late payment continues to be an issue with 27% saying they are often paid late, a slight decrease from the last quarter when it was 31%.
Interestingly the number that said there was 'no chance' of taking on staff dropped dramatically from 31% to 22%.
A third (34%) said they also had a full or part-time job in addition to the business, suggesting founders are building their company as a side hustle to increase their income. This was up 2% on the last survey. It was most likely to be the case in the East of England, where half of businesses polled said they had another form of income.
Founders aged between 25 and 34 were most likely to be operating a side hustle.