Dragons’ Den: Entrepreneur opens up about mental health
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
With over five million small businesses in the UK, thousands are struggling to keep their doors open with skyrocketing costs and a crunch on their customer base. Express.co.uk spoke to business lenders and entrepreneurs who shared the devastating impact the cost of living is having on this delicately balanced sector.
Small business lender iwoca undertook research to look at the impact of rising costs on small businesses who have been caught in a “perfect storm”.
They found one if four small businesses have had to increase their prices to keep up with costs, while 30 percent are having to cut back on their energy usage to stay afloat.
However, 17 percent also added that doing this will have a negative impact on their business, showcasing the corner they have been backed into.
The cost of living has hit everyone, and as customers tighten their budgets the small business market has never been more competitive.
Small business owners have been backed into a corner, not able to make the cuts that normal employees can while still battling to keep the doors open and recuperate the losses made during the pandemic.
Francesca Cingano, owner of Italian catering business Cateritaly shared that she “can’t just turn off the lights or put solar panels on my roof”.
She continued: “I have to use dishwashers, cookers and fridges everyday to keep my company running – my energy bills have increased by as much as 20 percent already this year.”
Photography entrepreneur Peter Meyer, owner of The Meyer Studios, has experienced a similar energy struggle, as his studio is in a celebrity style penthouse.
He said: “Costs are up, consumers are buying less so you’re gap in the middle is far worse than anyone would want. Profits are way less to the point of non-existent and in some cases losses. It’s a pretty sad chart.”
His energy expenses have been hiked twice in the last year, now paying over double what they were originally billed.
He noted: “It’s not just a couple of hundred, it’s a couple of thousand for the year. We’re having losses already because of people who are cancelling because of what happened with Covid. It’s not easy.
“We can’t afford as much as we used to and getting loans is not as easy as it used to be and your credit card is not as big as it used to be.”
Mr Meyer started his photography business just before Covid, catering to a niche group of actors and models, with inheritance from his father.
He shared: “Everyone was panicking. I tried to manage the business accordingly, cut back where we needed to, open our days and consolidate our bookings. Overheads are gigantic today so it really was trying to manage the storm as best possible. If anything it’s been even harder.”
Businesses had a short “glory week” between Covid restrictions ending and the war in Ukraine starting, which Mr Meyer said has impacted not just the business but his customers as well.
Mr Meyer has not increased his business prices “for the simple reason” that he knows his customers are in the same position.
He added: “We’re all in the same boat and it’s sort of a ‘Are we sinking or are we sailing? What’s happening with the boat?’.
“As much as we are suffering, we have less consumers because of what they’re doing to them as well. We are battling a hell of a lot more.
“In order to survive, sometimes people have to be ruthless. As an entrepreneur I’m doing this more to survive than we are to gain because I don’t think we’re in a period of prosperity right now.”
Arguably one of the hardest hit sectors during the pandemic was health and beauty, where people could simply no longer attend gyms and appointments for months on end, an issue which Sylwia Sokolowska fears may happen again.
She told Express.co.uk: “This whole Covid period has literally just killed many businesses and put many difficulties in my business as well. It hasn’t been easy and since the Ukraine war came it has been impacting our business as well.”
The biggest issue facing small businesses is being caught between insurmountable price hikes and the inability to raise their own prices, as Ms Sokolowska noted: “If I raise the prices I will lose the clients.”
She added that the support given to small businesses during the pandemic “it’s peanuts” compared to running costs of a business, which for her is over £20,000 per month.
Many industries were excited at the prospects of the first lockdown ending, not knowing that it would soon be followed by a second.
Ms Sokolowska added that this was a great expense, with money invested into new staff, marketing and more all for nought as doors had to close barely two months later.
Ms Sokolowska started as a Studio Figura franchisee in Poland seven years ago and after seeing the potential of the business, brought the brand to the UK running Studio Figura Isleworth.
She shared: “I’m in a massive loss because of what happened and it’s not just my business. Many businesses, whoever I’m speaking to have all gone through the same problems.”
Many businesses owners have had their own funds on the line “in order to survive” and Ms Sokolowska has even had to sell one of her properties to stay afloat: “I don’t want to do that but i’ve got no choice because the government decided to close our businesses for several months and the money that they’ve been giving us is peanuts compared to the expenses that we have everything month.”
This is both a combination of lacking support during the pandemic, dwindling clientele numbers and difficulties getting business loans in the current economy.
Mr Meyer also criticised the assistance provided to small businesses during the pandemic, by the Government, noting that because of the loan element, “they’re gaining, we’re not. I think it’s pretty harsh for businesses to be paying it back.”
He said: “Maybe if they could give some kind of credit towards the increases great, but they’re not going to do that. There’s so much to recoup from what they’ve been doing through all the furlough schemes and everything through the pandemic, they’re going to be recouping versus giving.
“It’s always the same. Death and taxes as they say. I think we’ll be feeling an effect for at least five years to come, if not more. Now we feel the reality of you can go out but what can you afford? This is the new reality.”
YouLend co-CEO, Mikkel Velin, shared some advice for small business struggling under the economic load.
He advised: “Minimising drastic fluctuations in cash flow will be crucial in the face of unexpected obstacles, such as supply chain disruptions or price increases. By reviewing the funding options that your e-commerce or payment provider offers, you have options at your fingertips whenever you need them.
“Secondly, pre-empting and mitigating against potential changes to supplier payment terms and prices by negotiating new terms that will fix your prices for longer to build in stability in your cost structure, or including potential price increases in your budget, will be key.”
Source: Read Full Article