A tidal wave is about to hit businesses in the UK, and very few people realise it.
During the period of the pandemic, support for businesses was huge and expensive. Grants were issued and furlough took the pressure off the payroll. The efforts were lauded as exemplary for saving small and medium-sized businesses from total destruction, whilst being forced to close. All of this was great, and certainly sustained businesses through that period.
It seemed that suddenly across the country, there were the beginnings of an understanding that businesses are the lifeblood of society, rather than the often vilified enemies of the people, merely out to force money up the capitalist ladder and crush the little guy. People began to realise that most businesses are owned by real people. Through struggle, risk, and endeavour, they created jobs and careers for their employees and services for their customers.
Sadly, this understanding seems to have slipped right back toward square one since the end of the pandemic restrictions. The money ran out, and now it’s time to start climbing back out of the hole in the nation’s finances. So, who should the nation turn to for this? Yup, businesses!
The smallest of the businesses, although many also struggle, are also able to get through the storm. The Covid grants were pretty much a one size fits all solution. Many small businesses received more than they really needed to get them through, and were able to make that money go much further. Smaller premises need smaller rents, and many are even exempt from business rates. It was tough to get by with no income during the lockdowns. Yet since then, they have had the opportunity to grow again.
How you could be squeezed as a mid-sized business:
These factors indicate that as we roll through 2023, medium-sized businesses are being squeezed from every angle. Most have been in survival mode through 2022. All hoping that consumer behaviours will start to return to pre-pandemic normality. Yet we are all struggling to see that coming through. It is clear that once the National Minimum Wage increase and business rates relief end in April, this will be the final nail in a vast number of business coffins. We will see bigger numbers of SMEs going under than ever before, spiking unemployment, and reducing Treasury Income. Unless something is done to support SMEs through 2023, or enough SMEs are able to adapt their methods to drive better efficiencies, our economy will simply implode.
The CEO of BrewDog released an article recently that summed it up really well. He noted that if he passed the increase in his costs on to the customer, a pint of beer would cost £27.50.
What does this have to do with your Business?
Well, the answer may lie in the unlikely form of the city of Preston. Following the 2008 financial crisis, Preston was facing a pretty dire situation economically. It was not wholly dissimilar to what many more towns and cities are facing across the country today. The council in Preston realised a huge proportion of its money was being channelled elsewhere across the country (and wider). A small proportion was actually being circulated locally.
There was a huge drive from the city’s Chamber of Commerce to anchor as much of the supply chain as possible for the big businesses in the city to using only local suppliers where possible.
When the local police station needed to be refurbished, they eschewed the standard practice of getting a large national contractor in. Instead, they held procurement events at the local college to garner the interest of local businesses in every aspect of the project, from tradespeople to curtain fitters, carpet shops to one-man-bands. This became a significant opportunity for these small businesses. This meant the majority of that huge project funding went to local businesses, whom employ local staff, and themselves buy local supplies. This meant that over time a culture set in that all local businesses strive to make their purchases locally where possible and keep the money from escaping the local economy as much as they can.
What YOU can do right now to change all this:
If the citizens in a town or city can all be encouraged to follow the same model then the economic effect would be vast. This applies to every single person in the country who makes any sort of purchase; YOU! It is sometimes far easier and more convenient to buy your items online from a big purveyor than to go out and buy it locally. Yet, if you made just a small 5-10% change in the things you buy from a local provider, it would make a huge difference to these businesses. Your decision can keep them alive, and grant them the ability to keep competitive pricing, innovative products and services, and even local jobs.
10 ways you can save British mid-sized businesses:
- Put the phone down, and buy it locally!
- Like, share and comment on local businesses’ social media posts.
- Ditch the supermarket for the local grocer, butcher and baker.
- Tell your friends about the local businesses you like.
- Tip wherever you can, whatever you can, and not just waiting staff (barista, hairdresser, massage therapist, anyone who provides you with a service!)
- Leave online reviews for great local places (not just restaurants).
- Plan days out closer to home.
- Eat and drink at independent outlets rather than chains (the coffee is normally better too!).
- Give gifts of local business vouchers to your friends.
- Ditch the online exercise class and find a local instructor.
You could also encourage your local businesses to do the following:
Automate: Businesses need to find a way of automating more. We have low levels of automation in the UK which push up our costs compared to competitors.
Bring it back! Onshore more production to cut supply chain issues will help businesses. Let’s look to make more things!
Find the talent: Attract people back to work by being creative with hiring packages, childcare and working hours would help address our employment shortfall.
Create markets: Small businesses should buy from small businesses themselves. Lots of business owners complain about consumer behaviours and then buy the cheapest goods from China. Let’s be better consumers and buy from each other like the Preston Model!
Make the most of the government’s innovation grant funding schemes.
If these changes are not made, and quickly, we will see the biggest collapse of British business within our lifetimes, and it will happen this year.