1.5m UK small business owners expect their business to contract this year
The rising cost of living is the biggest concern for small businesses but tech adoption and mentoring offers a lifeline, according to Mastercard.
New research among UK small businesses from Mastercard reveals two years on from the pandemic, rising inflation and energy costs are now their top concerns, although many remain positive about their future prospects provided they have the support they need to succeed.
Released to mark yesterday's UN's Micro-, Small- and Medium- Sized Enterprises Day, the Mastercard Strive Business Barometer found that small businesses say rising inflation (42 per cent) and energy prices (38 per cent) are their current biggest challenges, with around 1.5 million owners (28 per cent) expecting their business to contract this year as a result.
One in five (22 per cent) say they now feel more concerned about their business than before – a significant jump from the 15 per cent who said the same in February 2022.
Despite these current concerns, the data shows there is optimism among many of Britain's small business owners about the future. Almost six in ten (57 per cent) say they feel generally positive about their business' future with this highest for those businesses in construction and manufacturing (65 per cent) and education and healthcare (62 per cent).
Technology is crucial to support small businesses as the research found that businesses that already utilise technology are more likely to feel positive. Around half (48 per cent) of those using digital payment methods and the same proportion (51 per cent) of those who have adopted social media and online advertising say they plan to grow the business in the next five years – significantly higher than the average (39 per cent).
Two in five (40 per cent) small businesses say they are likely to increase the use of technology and digital tools going forward, with the same proportion (39 per cent) saying access to new technology and digital tools will be crucial to the future growth of the business. One in four (23 per cent) say that access to mentorship and support will also be central to their business success.
Mastercard is addressing these issues with Strive UK – a programme designed to help the UK's micro and small businesses access the support and guidance they need to identify, utilise and benefit from technology – whether accounting software, online marketing or digital payment options.
Mary Portas, retail expert and ambassador for Mastercard's Strive UK said:
"After struggling to stay afloat through the pandemic, the cost of living crisis is now adding extreme pressure to small businesses across every sector. These businesses are not only the backbone of our economy – making up 99 per cent of all businesses – but of our communities, and have played a crucial part in society during recent years as people have wanted – and needed – to shop local.
"As we look ahead, it's clear that technology will play an increasingly central role in small businesses success – particularly for female and ethnic minority entrepreneurs who have historically faced greater challenges. But for many business owners, it's difficult to know what the right tools are for their businesses and where they can access support. That's why initiatives like Mastercard's Strive UK are so important, to help small business owners get the help they need not just to survive, but to thrive in years ahead."
Kelly Devine, Division President, UK & Ireland at Mastercard, comments: "Over two years on from the start pandemic, small business are once again faced with challenges as they operate their business in the current economic environment.
"Despite this it's positive to see so many business owners feeling optimistic about the future. Those that already invest in technology are the most confident, and the majority of businesses see technology as a vital part of their growth going forward. The Mastercard Strive UK programme is designed to help UK business owners navigate the current challenges and succeed, offering free guidance and personalised, one-to-one coaching to ensure they can adopt – and benefit from – digitising their businesses."
