NOVUNA BUSINESS FINANCE RESEARCH: 8 IN 10 SMALL BUSINESSES CITE BARRIERS TO GROWTH

LONDON, June 14, 2024 /PRNewswire/ -- More small businesses cite barriers to growth today (80%) than was the case in pre-pandemic Britain (73%) – and, compared to the last General Election year (2019), across five industry sectors and six UK regions more small businesses cite market challenges that are holding them back. 

Compared to the last General Election year of 2019 -  small businesses in five industry sectors – construction (83%), hospitality (86%), media (86%), medical (80%) and agriculture (78%) - are more likely today to be facing barriers to growth.

Regional findings: Compared to the last General Election year (2019), small business owners in six regions – South West (87%), East Midlands (83%), South East (82%), West Midlands (81%), North West (80%) and Wales (78%) - are more likely to cite barriers to growth today.

These findings are the latest from the quarterly Business Barometer study from Novuna Business Finance, which has been tracking small business outlook for the last 10 years. The latest poll found that eight in 10 small business owners identified barriers to growth that were holding them back.

The UK's top 5 barriers to growth for small businesses in Q2 2024

Of those small businesses that cite barriers to growth, it is clear from the Novuna data that there are five major challenges that have remained as barriers over time and have resonance to enterprises spanning region, sector, age and turnover.

1. Market uncertainty: This is the single biggest issue for small business owners today. Whilst slightly down on last quarter, 41% of enterprises name it as a barrier to growth, and the level of concern over market uncertainty is significantly higher today than it was during the pre-Covid years. For example, in 2015, 31% of small businesses cited market uncertainty as a barrier to growth – and in 2016 the figure stood at 33%.
2. Overheads/ fixed costs: A symptom of the economic volatility, energy price rises and cost-of-living crisis which followed the War in Ukraine - 25% of small business owners see these rising costs as a barrier to growth.
3. Brexit: Nationally, 21% of small business owners still cite its legacy as a barrier to growth.
4. Cost of skilled labour: The challenges small business owners face finding skilled labour – and at an affordable price – is at a record high. For the last three years, this has been a consistently serious problem, with 19% citing it as a top barrier to growth in Q2 2024. Furthermore, there have been significant five-year rises in the North East (from 7% to 22%), London (17% to 27%) South East (10% to19%) - and rises too in the North West, West Midlands, East, South West, Wales and Scotland.
5. Red tape: Whilst the proportion of small businesses that cite red tape as a barrier is falling, it is still prevalent for 16% of enterprises nationwide.

Jo Morris, Head of Insight, Novuna Business Finance comments: "Many small businesses see more and bigger barriers to growth today than they did before the world changed in March 2020. Some issues like Brexit have endured rather than faded, and the economic challenges of recent years have left a lasting legacy on dealing with fixed costs, overheads and labour costs. On top of all this, is the dark cloud of uncertainty, something every small business owner dislikes and finds it hard to forward-plan against. At Novuna Business Finance we are working to provide flexible tailored financial solutions that help established small businesses to achieve their true potential."