Vistage, the world’s leading business performance and leadership advancement organisation for small and medium sized businesses, recently released its quarterly UK SME CEO Confidence Index for Q1 2022. The report sees the business confidence index hit 99.3 points, a 18% decrease since the last quarter.
- 54% of UK SMEs believe that economic conditions will worsen over the next 12 months
- 84% anticipate that the cost for services will increase dramatically
- 52% of all leaders expect that Russia’s invasion on Ukraine will have a direct impact on business
The quarterly survey found that business leaders across the UK are concerned about the economy, with 54% believing that economic conditions will worsen over the next 12 months. The latest Vistage CEO Confidence Index reveals how UK SMEs feel about the following key business indicators in 2022.
THE IMPACT OF INFLATION AND SUPPLY CHAIN ISSUES
Just under half (44%) of all small and medium sized businesses expect fixed costs to rise over the coming year, and as a result 85% of businesses anticipate having to increase the cost of their products and/or services. Meanwhile only a third (39%) are projecting increased profits.
Respondents cited rising employee compensation and energy prices as major factors impacting their business:
- Increased wages and compensation (79%)
- Increased energy prices (74%)
- Increased prices from vendors (69%)
- Higher costs for raw materials (58%)
More than a third (37%) of leaders best describe their supply chain issues as actively getting worse. Over half (52%) expect, and are already experiencing, severe disruption to their supply chains following the invasion of Ukraine by Russia.
HIRING AND THE LABOUR SHORTAGE
According to data from the Office of National Statistics (February 2022), job-to-job moves increased to a record high of 988,000, driven by resignations rather than dismissals, during the October to December 2021 period.
Vistage reports that 69% of business leaders have experienced hiring and talent issues impacting their ability to operate the organisation at full capacity. In a bid to redress challenges within the labour market small businesses have invested in the following areas: training and development of the existing work force (69%), boosting wages (66%), increasing employee benefits (52%), reorganising the existing workforce (37%), refining recruitment strategies (48%), allowing employees to work remotely (47%), investing in automation and labour-saving devices (35%), increasing overtime for existing employees (18%), slowing or delaying growth (17%), offering hiring bonuses (15%), creating apprenticeship or internship programme (13%).
“The last quarter has been difficult for UK SMEs as they contend with existing challenges of developing talent, and manage spiralling costs and inflation” said Geoff Lawrence, Vistage, Managing Director UK, and Ireland.
“As confidence in the economy has dipped, business leaders need to remain as agile as ever to help navigate today’s tricky circumstances by looking at cost effective ways to retain key talent, and off-set inflation. We’ve worked closely with businesses for more than 60 years to overcome various economic challenges and remain optimistic that the business landscape will recover.”