- Half (51%) of UK SMEs said the UK economy improved in 2021; almost one-third (32%) of SME business owners expect the UK economy will improve or remain the same in 2022
- Just over half (53%) of UK SME leaders expect their business profitability to improve in 2022
- 37% of UK SMEs have revealed that Brexit did not impact their business, and 29% believe that the impact of Brexit on their business is getting better
- A majority of small businesses (66%) are investing in technology to reduce the labour burden on their business
Vistage, the world’s leading business performance and leadership advancement organisation for small and midsize businesses, has released its quarterly UK SME CEO Confidence Index for Q4 2021. The report sees the index hit 120.7 points.
The survey found that business leaders remain relatively optimistic, with almost on-third (32%) of SME business owners expecting the UK economy will improve or remain the same in 2022. More importantly, 53% of UK SME leaders expect profitability to improve in 2022. Furthermore, 72% of those surveyed also believe their firm’s sales revenue will increase this year.
The latest Vistage CEO Confidence Index also revealed how UK SMEs feel about the following key business indicators in 2022.
According to the Office of National Statistics, Brits left their jobs in record numbers in 2021, with job-to-job moves totalling 979,000 between July and September alone, signalling a significant disruption for businesses facing lower retention levels – often referred to as ‘The Great Resignation’.
Vistage reports have found that 20% of SMEs saw a higher staff turnover last year, backing the official UK figures. Furthermore, a significant number of business leaders (75%) confirmed that hiring challenges impact their ability to operate the business at full capacity.
To overcome the recruitment challenges, respondents are introducing new initiatives to attract and retain talent in 2022. Over one-third (35%) of small businesses agree to different degrees that diversity and inclusion within their organisations is a priority for the CEOs.
The survey also indicates the recruitment initiatives implemented by SME leaders in 2021, including:
- Boosting wages (71%)
- Investing in training and development (83%)
- Introducing remote working (57%)
- Investing in automation and labour-serving technologies (42%)
- Delaying business expansion (19%)
INTERNATIONAL TRADE & SUPPLY CHAIN DISRUPTION
A year after Brexit came into effect, the Office of National Statistics found that UK export levels have declined by 2.1% in the last 12 months. Interestingly, 37% of CEO respondents said Brexit has had no meaningful impact on their supply chain or customer base. In comparison, 29% confirmed that Brexit’s business impact was slowly getting better.
In 2021, many sectors suffered major supply chain disruptions, mainly in retail and manufacturing, and, according to the survey, many of these challenges will continue to buffer businesses in 2022. For example, 30% of SME leaders say that their supply chain network is getting worse, with a similar number (28%) saying things are slowly getting better.
Almost half (48%) of UK small businesses increased prices towards the end of last year, and 68% expect that prices for their product and services to rise in the next 12 months. Furthermore, of those planning to increase their prices, more than 73% of respondents will raise their margin by 5% or more in 2022.
While there are myriad reasons for escalating prices, the Vistage survey highlights the reasons contributing to these decisions, including:
- Higher costs for raw materials and other inputs (55%)
- Increased prices from vendors (61%)
- Offering increased wages (78%)
“From labour shortages to supply chain disruptions, UK business leaders had many challenges to contend with in 2021,” said Geoff Lawrence, Vistage, Managing Director UK and Ireland. “Despite these issues, there is cause for optimism as the economy continues to track upwards and business concerns are ironed out.”
“What the survey tells us is that UK SMEs are now well-versed in dealing with pandemic-related disruption, demonstrating creativity and resilience. This knowledge gives us confidence that the business landscape will continue to trend upwards and improve. From our work with our members, we have seen indications that business leaders that invest in their workforce, are willing to innovate and accept guidance from peers are going to be in a prime position to meet the ever-evolving post-pandemic business environment.”