Managing your money
SME Survey Insight: UK SMEs plan to reduce costs in 2017 fearing Brexit and Trump
It seems Brexit may have sparked the urge to cut back in many small businesses according to the results of our recent survey of 200 UK SMEs. 58% of SME owners said that their main priority for the New Year was to reduce costs: many sectors prioritising this over developing the skills of their staff and expansion.
The sector that prioritised ‘reducing costs’ above everything else was the retail sector making up 21% of the 58% that selected this as their main concern for 2017. When broken down by size of business, it was the smaller of the businesses (from 1 to 49 employees), that will be reducing costs next year, rather than the slightly bigger SMEs made up of 50 or more employees.
What do SMEs see as challenges in 2017?
Cost reduction, in conjunction with Brexit and concerns about the new American President-elect Donald Trump, are listed as challenges businesses might have to face in 2017. This suggests that after a challenging 2016 those in the retail industry are opting to remain cautious when entering into the New Year, rather than focusing on business growth.
This may be because of the uncertainty that these two decisions- Brexit and Trump- have brought with them.
Just before the Brexit vote, £1 bought around $1.48 in global markets. It has now decreased by about 16%, making it $1.24 on average. As a result import prices have risen, affecting businesses that purchase materials, products or services overseas and potentially leading to a rise in applications for Company Loans to help businesses cover additional costs.
This could be why those in the retail sector are having to prioritise reducing costs going into a Brexit Britain in 2017, in addition to concern over the lack of details coming from Donald Trump regarding his presidency policies, which could also affect trading with the States. One respondent even commented that they need ‘better prices to survive’.
The most popular challenge mentioned in the survey however, was competition. 86% of those that listed this as their greatest challenge of 2017 were businesses made up of 1-10 employees across several different sectors, including property, hospitality, finance and technology. This brings to light the struggle that smaller businesses are facing against bigger companies, as more people choose cheaper chains over independent companies, leaving them unable to compete.
What are the New Year’s Resolutions for SMEs?
Respondents were also asked to give their business New Year’s Resolution: the survey revealing that 28% chose to ‘gain a better work life balance’. Of those that listed this as their New Year’s Resolution, 24% of them were Millennials in the 25-34 year old age bracket with 25% of them being in the hospitality industry.
So, despite expecting a difficult 2017, many still aim to improve their home life by achieving a better balance between work and home.