Cost-of-living crisis was biggest challenge for small business owners this year

14 December 2023 , 13:12

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A quarter of small business owners have taken out a start-up loan this year, to help grow their fledgling enterprise (Image: Getty Images)

Three in 10 small business owners (29%) have cited the cost-of-living crisis as the biggest challenge they have faced this year – followed by tax hikes (21%), and rising business rates (19%), according to a study.

Other top concerns for those running their own small enterprise include the risk of recession (22%), a lack of funding, and access to skilled workers (both 18%).

And a fifth, of the 450 new business owners surveyed, feel that corporation tax cuts are needed to help support the growth of their start-ups, while 24% said increased investment would help – and 27% believe they would benefit from better access to start-up loans.

However, despite these challenges, six in 10 of those polled (61%) feel more comfortable with the state of their business now, than they did earlier in the year. And two-thirds are confident their company will be in a stronger position still, in six months' time.

Almost all respondents (95%) expect to grow in the year ahead, planning to make at least one new hire – while 8% reckon they will grow their team by at least eight people.

Big Four banks made £20billion in 9 months as households battled interest rates

It also emerged that 38% believe the Government has created an environment in which their business can thrive.

Andy Fishburn, from Virgin StartUp, which created the bi-annual Founder Barometer (Virgin StartUp)

The bi-annual Founder Barometer was created by Virgin StartUp, whose managing director, Andy Fishburn, said: “It’s important to hear directly from small business owners and start-ups.

“Despite a testing year, it’s encouraging to hear that many business founders are invigorated, and are heading into the new year with a positive outlook. The business community is no stranger to dusting itself off, and tackling hurdles head-on.

“But now more than ever, with several challenging economic issues surrounding us, we need to be honest with ourselves, and look at how and where organisations and our peers can support one another through what are undoubtedly unsure times.”

The research also found that, in order to grow their business in the past 12 months, founders have been using a number of creative options – including using personal savings (40%), a start-up loan (24%), and friends and family (23%).

However, 31% said access to venture capital and investors was a source of support missing for underrepresented founders – including female, black, minority ethnic, and disabled founders – with 24% saying the same about industry events and press coverage.

Andy Fishburn added: “We have always been proud to offer a voice for the start-up community, and particularly those from underrepresented backgrounds.

“We know that more support, including funding, is always required, and we have committed to helping many more exciting and brave founders reach their potential.

“We’re committed to standing shoulder to shoulder with founders, in both the good times and the bad. Put simply, we want to be a business for good, now and always.”

Martin Winter