Consumer confidence primary concern for small businesses

Meanwhile, the proportion of small businesses that say they are being held back by the cost-of-living crisis remains on a par with six months ago, with 87% still saying the challenges present a threat to their business.

The survey taken from Novuna’s Business Barometer polled 1,088 owners and senior decision makers of small businesses about their concerns around the cost-of-living crisis, tracking responses over a six-month period.

Topping the list of concerns, over a third of businesses (35%) were anxious about low customer spend levels, with an additional 27% citing less customer volume. Of the sectors most troubled about customer spending were those in the retail (62%) and hospitality (56%) sectors, and seasonal businesses (55%).

Linked with this was the inability to pass on high costs to customers – a factor that 32% of businesses were still grappling with (up three percentage points compared with six months ago).

In comparsion to the responses in the final quarter of 2022, the major difference in concerns were to do with rising energy prices and supplier costs. While a third (33%) of business leaders cited this as a major worry, this was down from almost 47% six months previously.

Concerns significantly eased about the weak pound (nine percent down from 24%), political leadership (14% down from 24%), and the volatility of cash flow (19%, down from 26%).

Joanna Morris, head of insight at Novuna Business Finance said: "Signs suggest that small businesses are beginning to adjust to the torrent of challenges that have come their way in the past three years, but this does not mean that these dark clouds have in any way cleared. 

“The economic environment remains extremely challenging, and understandably this is having a damaging effect on consumer confidence. That business confidence remains stable is testament to the ability of small businesses to stay nimble and agile even in these circumstances."