The Top SME Business Challenges of 2023
The UK's SMEs (small and medium-sized enterprises) are facing challenges in 2023, including consumer numbers being down due to the cost-of-living crisis, rising costs of bills, and reduced profit margins due to inflation. In this Firestarter blog we review the statistics and general feelings that surround the challenges that SMEs will be facing in 2023.
SMEs and their Importance for the UK Economy
An SME (small and medium-sized enterprise) is an organisation that has fewer than 250 registered employees and a turnover of less than £43 million. As we all know, SMEs (small and medium-sized enterprises) play an important role in the UK’s economy. With an estimated 5.5 million SMEs in the UK (over 99% of the business population, they are the beating heart of UK businesses. They are responsible for creating employment opportunities, economic growth and social development, but face many challenges every day.
The Challenges that SMEs Face in 2023
With growth on the horizon in 2023, Barclay’s SME Barometer data reports that 33 percent of SMEs plan on recruiting new staff in 2023 with a further 29 percent plan on purchasing new equipment or technology to support business growth. However, despite over two fifths of SME business leaders feeling optimistic about their business prospects there is still cause for concern from macro-economic pressures that business leaders will have to contend with.
Consumer numbers down due to cost-of-living crisis
During the festive period of 2022, a significant proportion of small businesses in the UK were at risk of closure, as consumers continued to feel the effects of a cost-of-living crisis. As a result, many SME leaders are already facing challenges in 2023, with 1 in 3 SME owners reporting significant losses.
This has left many businesses in poor shape as they entered 2023, with estimated turnover down 35 percent year-on-year, and some SME leaders considering the possibility of closure. To combat the cost-of-living impact, many businesses are having to increase prices of their products and services where others are reducing the size of their workforces.
Simply Business reports that 43% of SME business owners are worried about their sales and customer numbers, with the rising cost of living putting pressure on SMEs to increase employee salaries and absorb cost increases to remain competitive.
Navigating the challenges of rising costs, bills and running costs for SMEs
Heading into 2023, two thirds (65 percent) of SME owners say that they feel rising costs will be their single biggest challenge.
According to Simply Business, 26% of small and medium-sized enterprises are worried about their ability to pay bills this year. This is likely due to the ongoing economic uncertainty caused by the pandemic, which has led to reduced consumer spending and disrupted supply chains. Furthermore, the economic pressures of energy bills are resulting in more three quarters of SMEs feeling worried and more than half are now looking for avenues to help reduce the amount of energy they use.
With all SME sectors seeing price hikes it’s no surprise that 31% of SME leaders have expressed worry over increases in the cost of goods and services. The knock-on effect of inflation is resulting in lower profit margins which is having a significant impact on small businesses.
What’s next for UK SMEs?
The UK has recognised the importance of SMEs as being key drivers for economic growth and job creation. There have been a few initiatives aimed at supporting SMEs and helping them to navigate the challenges they may face throughout 2023.
One of the most notable steps taken by the UK government has been the creation of funding programmes that are designed to provide SMEs with access to affordable financing. Initiatives such as The British Business Bank provides loans and other forms of financing to SMEs, as well as the Enterprise Finance Guarantee, which offers loan guarantees to SMEs that might not otherwise be able to secure funding.
Why Focusing on your Sales Engine is Critical for Success in 2023
As a SME business leader, you know how important it is to maintain a steady stream of sales, especially during times of economic uncertainty when customers are hesitant to spend, running costs are high and energy bills are through the roof. It’s crucial that you and your team focus on your business’ sales engine to ensure that it’s running smoothly. Without a strong sales rhythm and your selling processes lacking rigour, your business risks losing out to competitors.
However, finding solutions to sales problems isn’t always straightforward. You may need to ask yourself whether your team has the necessary skills and experience to drive growth, whether your current business plans are suitable for current market conditions, and how well-equipped your business is to manage change.
If you’ relate to the statistics we’ve provided throughout this piece and are struggling to build a top-performing sales engine, it’s time to seek expert help.
At Firestarter, we specialise in helping businesses like yours to increase sales. We strengthen your existing team, provide additional resources, and use our SME expertise to get your sales engine firing on all cylinders. No matter what challenges you’re facing, we’re here to help you sell more and grow your business.
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