Eight in ten small business owners say they are struggling with a range of factors that are holding their business back – and it is Britain’s most established, heritage businesses (those trading for more than 35 years) that are struggling the most to change in uncertain times comments Gavin Wraith-Carter, Managing Director Hitachi Capital Business Finance
Compared to last year, the issue of dealing with barriers to growth is on the rise for small businesses at large (up from 73% to 79%) and business concerns have risen across 11 different industry sectors in 12-months.
Hitachi Capital’s Business Barometer asked 1,184 small business owners which external factors were holding their business back over the next three months. Market uncertainty emerged as the single biggest barrier to growth for small business owners generally (up from 25% to 31% in a year), followed by uncertainty over the future their own business (up from 15% to 17%). Other major perceived barriers included; red tape (16%), the tax burden and business rates (16%) and the perceived difficulty of competing on price with larger competitors (13%).
Key sector findings:
• Small businesses owners in the retail sector (89%) were those most likely perceive significant barriers to growth. Just under half blamed market uncertainty (47%) as a key obstacle to growth, whilst a quarter pointed towards rising rents on the high street as a problem for their long-term growth (24%).
• The legal sector has seen the sharpest rise in the percentage of small business owners that identify barriers to growth (up from 61% to 79% over 12-months) – with market uncertainty (26%) and red tape (21%) cited as the biggest challenges.
• Small businesses in the construction sector were those most likely to say that the cost of skilled labor was holding their business back (20%).
• In the manufacturing sector concern over barriers to growth has risen from 78% to 87%. Here, volatile cash flow was mentioned as a significant issue (22%, compared to a national average of 13%).
Age affects growth
The nation’s oldest small businesses – those that have been trading for 35 year or more – were most likely to see barriers to growth. Market uncertainty was most likely to be seen as a danger (35%) than an opportunity, and 31% struggled with red tape and new regulations (contrasting to just 9% of start-ups). Rising rents was a bigger concern for these older small businesses (17%, compared to 10% of young businesses).
Top barriers to growth – by business age
Over 35 years Up to 5 years
Market uncertainty 35% – 25%
Red tape 31% – 9%
Uncertainty over the future 17% – 10%
Cost of skilled labour 14% – 10%
Exchange rates 9% – 8%
Rising rents 17% – 10%
Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance said, “Many small business owners have to keep one close eye on their business and the other firmly set on the wider market picture if they want their business to succeed in this volatile climate. In the current climate, market uncertainty is a challenge and older businesses in particular are struggling to adapt.
“The key issue for businesses to address is whether market uncertainty is a risk or an opportunity. For many small businesses, now is a time to re-forecast plans, to invest in new equipment, to diversify and look to launch into new markets. Bigger businesses are often slower to react to change and can be far more risk-averse in adapting to market uncertainty. Now is a vital time for the banking and specialist finance community to be backing the small business community, encouraging optimism and helping them to unlock their true potential. Hitachi Capital Business Finance is standing tall with the small business sector at a time of change.”