LONDON, June 19, 2023 /PRNewswire/ — Customer spending has become the number one concern for small businesses this quarter, outpacing concerns about rising energy and supplier costs, according to new research by Novuna Business Finance. Meanwhile, the share of small businesses saying the cost-of-living crisis is holding them back remains at the same level as six months ago, with 87% still saying the challenges pose a threat to their business.
The Novuna Business Barometer survey interviewed 1,088 small business owners and senior decision makers about their concerns about the cost of living crisis, tracking responses over a six-month period.
Consumer confidence is now the dominant priority
Topping the list of concerns, more than a third of companies (35%) were concerned about low levels of customer spend, with an additional 27% citing lower customer volume. Of the sectors most concerned about customer spending were retail trade (62%), hospitality (56%) and seasonal businesses (55%).
Linked to this was the inability to pass high costs on to customers, a factor that 32% of companies were still grappling with (+3% points compared to six months ago).
The threat of rising costs begins to set in
Compared to responses from Q4 2022, the main difference in concerns had to do with rising energy prices and supplier costs. While a third (33%) of business leaders listed this as a major concern, it was down from nearly 47% six months earlier.
Improving political and economic confidence
Concerns about pound weakness (9% vs. 24%), political leadership (14% vs. 24%), and cash flow volatility (19% vs. 26%) all decreased significantly.
joanna morrisHead of Insight at Novuna Business Finance comments: “Signs suggest that small businesses are beginning to adjust to the torrent of challenges that have come their way over the last three years, but this does not mean that these dark clouds have by any means lifted. The economic environment remains extremely challenging and understandably this is having a detrimental effect on consumer confidence. That business confidence remains stable is a testament to the ability of small businesses to remain nimble even in these circumstances.”
SOURCE Novuna Business Finance
Consumer Spending Becomes Top Concern for Small Businesses This Quarter
Small businesses are facing significant challenges this quarter, with customer spending emerging as the number one concern, surpassing worries about rising energy and supplier costs, according to a new research conducted by Novuna Business Finance. The survey, known as the Novuna Business Barometer, interviewed 1,088 small business owners and senior decision makers over a six-month period to track their concerns regarding the cost of living crisis.
The Dominant Priority: Consumer Confidence
One of the key findings of the research is the overwhelming concern regarding low levels of customer spend. More than a third of the companies surveyed, accounting for 35%, expressed their worry over decreased customer spending. Additionally, 27% of the businesses cited lower customer volume as a significant concern. Within specific industries, the retail trade sector registered the highest level of concern, with 62% of businesses expressing worries about customer spending. This was closely followed by the hospitality sector at 56% and seasonal businesses at 55%.
Linked to the concern about customer spending is the challenge faced by businesses in passing on high costs to their customers. The survey found that 32% of companies are still grappling with this issue, reflecting a 3% increase compared to six months ago.
Rising Costs: A Growing Threat
Although concerns about rising energy prices and supplier costs remain prominent, there has been a slight decrease in the percentage of business leaders listing them as major concerns. Compared to responses from Q4 of 2022, the research highlights a decline from nearly 47% to 33%. This suggests that businesses are adapting to these challenges to some extent, possibly finding ways to mitigate the impact of rising costs.
Improved Political and Economic Confidence
The survey also revealed a noticeable decrease in concerns related to pound weakness, political leadership, and cash flow volatility. Pound weakness was cited as a significant concern by 9% of respondents, down from 24% six months earlier. Similarly, concerns over political leadership decreased from 24% to 14%, while worries about cash flow volatility fell from 26% to 19%. These findings indicate that small businesses are regaining confidence in the political and economic landscape, which may contribute to a more stable business environment.
Insights from Joanna Morris, Head of Insight at Novuna Business Finance
Joanna Morris, the Head of Insight at Novuna Business Finance, acknowledges the challenges faced by small businesses in recent years. While signs suggest that businesses are beginning to adapt to these challenges, Morris emphasizes that the economic environment remains extremely challenging. This challenging environment has resulted in a detrimental impact on consumer confidence. However, Morris highlights the resilience and nimbleness of small businesses, as reflected in their stable business confidence.
Additional Piece: Navigating the Cost of Living Crisis – Strategies for Small Businesses
The cost of living crisis poses significant challenges to small businesses across various sectors. In order to navigate this crisis and ensure sustainability, businesses must be proactive in implementing strategies to address the concerns surrounding customer spending, rising costs, and economic uncertainties. Here are some key strategies that small businesses can adopt:
1. Building and Retaining Customer Loyalty:
– Focusing on customer satisfaction and delivering exceptional customer experiences can help to foster loyalty and increase customer spending.
– Implementing customer loyalty programs, tailored promotions, and personalized offers can incentivize customers to continue investing in products or services.
2. Diversifying Revenue Streams:
– Relying solely on one source of revenue can leave businesses vulnerable to fluctuations in customer spending. Exploring alternative revenue streams, such as partnerships, collaborations, or diversifying product offerings, can help to mitigate these risks.
– Embracing e-commerce and online platforms can also expand opportunities for reaching a wider customer base and driving revenue growth.
3. Cost Management and Efficiency:
– Managing costs effectively is crucial during a cost of living crisis. Businesses should regularly review their expenses and identify areas where savings can be made.
– Negotiating with suppliers to secure better terms or exploring alternative suppliers can minimize the impact of rising supplier costs.
– Implementing energy-efficient practices and technologies can help to reduce energy costs and improve sustainability.
4. Adapting Marketing and Sales Strategies:
– Businesses should assess and refine their marketing and sales strategies to resonate with changing consumer behaviors and priorities.
– Leveraging digital marketing, social media, and targeted advertising can help businesses reach their target audience effectively and maximize their marketing budgets.
Conclusion:
The cost of living crisis poses significant challenges for small businesses, with customer spending emerging as the top concern. Despite this, businesses have shown resilience and adaptability in navigating these challenges. By implementing strategies that prioritize customer satisfaction, diversify revenue streams, manage costs efficiently, and adapt marketing and sales strategies, small businesses can mitigate the impact of the cost of living crisis and remain competitive in challenging economic environments.
Summary:
According to research conducted by Novuna Business Finance, customer spending has become the primary concern for small businesses, surpassing worries about rising energy and supplier costs. The retail trade, hospitality, and seasonal businesses are particularly impacted by low customer spending. However, concerns about rising costs have slightly decreased compared to six months ago. Small businesses also report improved confidence in the political and economic landscape. Despite the challenges posed by the cost of living crisis, small businesses are showcasing resilience and adaptability. Strategies for addressing these challenges include building customer loyalty, diversifying revenue streams, managing costs effectively, and adapting marketing and sales strategies. By implementing these strategies, small businesses can navigate the cost of living crisis and remain competitive.
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LONDON, June 19, 2023 /PRNewswire/ — Customer spending has become the number one concern for small businesses this quarter, outpacing concerns about rising energy and supplier costs, according to new research by Novuna Business Finance. Meanwhile, the share of small businesses saying the cost-of-living crisis is holding them back remains at the same level as six months ago, with 87% still saying the challenges pose a threat to their business.
The Novuna Business Barometer survey interviewed 1,088 small business owners and senior decision makers about their concerns about the cost of living crisis, tracking responses over a six-month period.
Consumer confidence is now the dominant priority
Topping the list of concerns, more than a third of companies (35%) were concerned about low levels of customer spend, with an additional 27% citing lower customer volume. Of the sectors most concerned about customer spending were retail trade (62%), hospitality (56%) and seasonal businesses (55%).
Linked to this was the inability to pass high costs on to customers, a factor that 32% of companies were still grappling with (+3% points compared to six months ago).
The threat of rising costs begins to set in
Compared to responses from Q4 2022, the main difference in concerns had to do with rising energy prices and supplier costs. While a third (33%) of business leaders listed this as a major concern, it was down from nearly 47% six months earlier.
Improving political and economic confidence
Concerns about pound weakness (9% vs. 24%), political leadership (14% vs. 24%), and cash flow volatility (19% vs. 26%) all decreased significantly.
joanna morrisHead of Insight at Novuna Business Finance comments: “Signs suggest that small businesses are beginning to adjust to the torrent of challenges that have come their way over the last three years, but this does not mean that these dark clouds have by any means lifted. The economic environment remains extremely challenging and understandably this is having a detrimental effect on consumer confidence. That business confidence remains stable is a testament to the ability of small businesses to remain nimble even in these circumstances.”
SOURCE Novuna Business Finance
https://www.prnewswire.co.uk/news-releases/novuna-business-finance-study-consumer-confidence-now-primary-concern-for-small-businesses-as-rising-cost-worries-ease-301853375.html
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