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True State of Business Confidence and Costs Revealed for UK SMEs

Estimated Read Time: 5 Minutes

Sean Owusu , 22 January, 2024

  • Survey data from Nucleus Commercial Finance found SME business confidence averages just 40.1 on a 0-100 scale.
  • Inflation is the most significant concern for 44% of SMEs, with rising operational costs impacting 40%
  • 53% of businesses are increasing prices to mitigate rising overheads
  • 79% of SMEs are encouraging remote workers to continue to work from home to save business costs
  • The insights come as NCF announces a further £200m in funding from NatWest for business loans for UK SMEs.

With high interest rates, the increasing cost of goods and a poor growth forecast, 2023 has been a challenging year for the UK’s businesses. New research from Nucleus Commercial Finance has revealed that business confidence amongst SMEs is stalling, resting at an average of 40.1 out of a possible 100.

The survey of 1500 SMEs found that this lack of confidence is being fed by a range of concerns, with inflation (a worry for 44% of respondents), rising operational costs (40%), and cashflow (36%) being the most significant causes of unease.

Other areas of concern included employee retention (28%), talent acquisition (24%), concerns around supply chain issues (19%) and access to emerging technology (14%).

With each of these issues impacting the running costs of SMEs, businesses are being forced into a range of strategies to mitigate the additional expenses they are facing. For more than half (53%) of SMEs, passing on snowballing costs to customers through price increases has been the only option. While almost a third (28%) of SMEs have turned to AI to reduce running costs, 21% have reduced their operating hours, and 16% have reduced the number of employees working for their business. A further 14% have reduced the range of products or services they offer customers.

When investigating how economic concerns impact operational performance for SMEs, NCF asked UK businesses whether they were still utilising remote working. The answer was a fairly even split, with 53% of SMEs continuing with a remote or hybrid workforce, and 47% of businesses having returned to an office-based operational infrastructure. However, where a work-from-home strategy was still being implemented, 79% of SMEs admitted encouraging employees to continue working remotely to save their firm money in office and utility costs.

Chirag Shah, founder and CEO at Nucleus Commercial Finance, comments: ‘It’s no secret that the UK economy has been struggling since the pandemic, and for SMEs this has meant a range of concerns. From rising costs and difficulties securing funding to staff shortages and slow or floundering growth, it can be challenging to know how to address these issues.

‘But while there are clear economic, social, and environmental reasons behind many of the problems that SMEs are facing, some of them can be tackled through access to data and access to funding. With access to the right data, you can gain vital insights into your business for informed decision-making. At NCF, we provide SMEs with a free data-insights platform that provides real-time analysis and commentary on various important metrics, including turnover, gross margin and profit and loss. This can help across the board, from recruitment and employee retention to product development. We have also just announced a further £200m in funding from NatWest for business loans for UK SMEs.

Understanding what your customers want and how your business functions can help to ensure that your funds – and other resources – always go to where they can make the most significant positive impact. And while this is beneficial at any time, it becomes essential during economic stress.’

About Nucleus Commercial Finance:

Nucleus Commercial Finance (NCF), established in 2011, stands as a hallmark of innovative fintech lending in the UK, having channelled nearly £3 billion to a myriad of businesses, big and small, across diverse sectors.

With a funding suite ranging from £3,000 to £2 million, Nucleus offers an assortment of alternative financial solutions, encompassing revenue-based loans, unsecured business loans, and loans secured against property.

NCF combines the robustness of traditional bank financing with the agility, speed and convenience of modern alternative lending platforms. With cutting-edge technology and a friendly approach, Nucleus builds tailored financial solutions, perfectly suited to meet the unique aspirations of every business it supports.

BY Sean Owusu




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