Headwinds for SMEs are gale-force as they prepare for the toughest of winters

The headwinds for small business owners are gale-force right now as they prepare for the toughest of winters, according to a new report.

The latest Coventry and Warwickshire Local Enterprise Partnership (CWLEP) Growth Hub SmartRegion report throws a spotlight on Labour Market Dynamics in Coventry and Warwickshire.

The report contains information from the Growth Hub’s business engagements as well as from CWLEP, Warwickshire County Council, Coventry City Council and other organisations.

A snapshot of the labour market shows 80 per cent of Coventry and Warwickshire’s working-age population is active with 20 per cent inactive, and with a lower rate of unemployment than the regional average.

According to recent ONS data, the labour market is continuing to tighten which is causing real difficulties for employers looking to take-on suitably skilled staff, or even to find the numbers of staff needed.

This is backed up by the Federation of Small Businesses (FSB) whose members say the widespread labour shortage is limiting local small firms’ ability to grow, at the same time as they also wrestle with other challenges.

Over the last 12 months, 78 per cent of small businesses have experienced difficulties in recruiting staff due to several reasons including a lack of individuals with relevant qualifications, skills, and experience (82 per cent) and a small number of applicants (60 per cent). 

Lee Osborne, Development Manager for Coventry, Solihull and Warwickshire at FSB, said this has contributed towards a fall in confidence among local FSB members.

He said: “In speaking with business owners locally there is huge concern about the cost of doing business, and for some their focus is on surviving the toughest of winters ahead as they are facing so many different issues including rising costs, interest rates, and recruitment.

“Our most recent local small business confidence survey shows confidence in negative territory, with late payment woes adding to pressures on margins and cashflow. The quarterly temperature-taking survey reveals that there is the greatest level of pessimism among small businesses outside of lockdowns. Rising costs continue to affect the majority of small firms, with two in five seeing costs increase by more than 10 per cent.

“Small business entrepreneurs are optimistic, dynamic, and innovative, which is why it is all the more stark to see this drop in confidence locally. They want to be driving growth and economic recovery, but the headwinds against them right now are gale-force.

“Despite the challenging outlook there are some positive signs locally with more small businesses reporting revenues and employment increasing, than those seeing a decrease. 

“With the overall picture one of continued decline in the confidence of small business owners especially as they look to the future, the Government must act now, to bring certainty needed for small businesses to trade and plan with confidence. Action on late payments would be a godsend for small firms, opening up flows of working capital to keep them able to trade.”

Craig Humphrey, Managing Director of the CWLEP Growth Hub, said a strong business eco-support system was now more important than ever.

He said: “Small businesses benefit from a strong local business support landscape and support from the Growth Hub, local authorities and business support organisations across the region will be really crucial in the coming weeks and months ahead.

“Recent political and economic turmoil has not helped, which is why it is vital the Government focuses on stability.”