More than half of small business founders expect to expand in 2023, a 12 per cent leap in ambition on the previous quarter, a new survey has found. Despite being impacted by rising costs (77%) and 42 per cent admitting profitability will take a hit due to cost pressures, 54 per cent said they expected to expand their business according to Enterprise Nation’s quarterly Small Business Barometer.
The survey, which analysed responses from more than 1,000 start-ups, micro and small businesses across the UK, found London was the growth outlier, with 63 per cent expecting to expand this year. Those operating in business services, education and food and drink businesses under three years old all stood out for their expansion plans.
Half are planning to take on staff (50%), and 57 per cent plan to invest by taking on board finance. The average amount of funding has also gone up. Businesses expect to take on an average of £55,972 in investment, a 16 per cent increase and six per cent above inflation.
That figure rises to £79,595 in London, followed by £68,250 in the South West. Businesses in the East Midlands expected to invest the least, with an average of £17,159, 22 per cent lower than in the capital.
Emma Jones, CBE, founder of small business support platform Enterprise Nation, said: “Small businesses are the most resilient people I know and it so good to see they are feeling better and brighter about the future. Founders are gearing up for growth through grasping technology, innovating, and planning to invest.”
But challenges do remain. A drop in sales was most felt in general retail (62%), beauty (61%), fashion (54%) and food and drink (54%). Those operating in business services felt the least impact on demand for their offering, with only 26 per cent suggesting they had seen a drop in sales.
They are also working longer hours, with food and drink firms overtaking technology businesses for the first time, with an average 50 hour working week, suggesting businesses are absorbing higher costs by working longer.
This is despite the fact that by far the biggest reason to start a business was to achieve a better work/life balance (48%), with only 29 per cent saying they wanted to earn more money.
Late payment continues to be a problem with 27 per cent saying they are often paid late, a slight decrease from the last quarter (31%).
Interestingly the number that said there was ‘no chance’ of taking on staff dropped dramatically from 31 per cent to 22 per cent.
A third (34%) said they also had a full or part-time job in addition to the business, suggesting founders are building their business as a side hustle to increase their income, a two-percentage point increase on last time. This was most likely to be the case in the East of England, where half (51%) of businesses polled said they had another form of income.
Founders aged between 25 and 34 were most likely to be operating a side hustle (42%). Read the report.
