Inflation, which has recently reached a new high, continues to represent a major obstacle for small and local businesses in the UK. This was illustrated in a recent study from Capital One which showed that 71% of small business owners have experienced a negative impact on their operations as a result of inflation in the past three months.
Despite these inflationary concerns, the report shows that small business owners remain optimistic in terms of their ability to mitigate the negative impacts of inflation. A study from IW Capital, a leading private equity house, shows that 58% of Brits plan to shop more at their local high street this year, providing essential support, and 47% expect the small business sector to experience rapid growth in 2022.
Investors are also turning to small and local businesses, providing a platform for them to prosper. With 16% of UK investors looking to back start-ups and newly formed businesses, it seems they will be given an opportunity to continue the success and progression of their companies throughout 2022. The small business sector continues to be vital for the UK business landscape, with SMEs accounting for 99.9% of the UK business population, three-fifths of employment and nearly half of turnover in the UK private sector. In the last quarter of 2021, 56.2% of SMEs reported a rise in earnings versus the same period of 2020.
With small businesses being the beating heart of local communities, Brits are ready to turn to them and it seems they are ready to utilise the support shown.
Luke Davis, CEO of IW Capital discusses the positive outlook for SMEs in the UK:
“SMEs have constantly adapted over the past few years to deal with unprecedented obstacles and new inflationary concerns should be no different. Small businesses have worked so hard throughout the last year, now with many developing creative strategies to stay lucrative amid rising inflation.
“It’s refreshing to see that 58% of Brits have a clear desire to back their local businesses, and I have no doubt that SMEs will utilise this support to continue to progress and develop.
“With 16% of UK investors looking to back start-ups and small businesses, the EIS could also be an important trend throughout 2022. It provides SMEs with much-needed investment and a platform to grow, whilst also providing investors with tax reliefs to incentivise this investment. Small businesses and SMEs throughout the UK have benefitted enormously from the EIS in the last 25 years, fuelling growth and job creation at an impressive scale.”