Following the GDP data published this morning, which showed the UK economy grew by 0.2% in April, small business owners have commented on the situation.
Gillian Ferguson of Stewarton-based Twisted Empire Bakes: “I’ve just closed my business down so the fact that the economy grew in April means nothing to me. The cost of raw ingredients and energy were to blame, as they decimated my margins. I could have kept struggling on but a combination of lockdowns, soaring inflation and incompetence in Government made things too much of a struggle over the past few years and I decided it’s no longer worth it.”
Louise Home, owner of Dorking-based restaurant, HolmeStores: “As the owner of a hospitality business, we’ve battled ongoing economic challenges like no other since 2020. Inflation and staff shortages have been a constant issue over the past 18 months. However, with sales dwindling over the past couple of months, it seems the anticipated positive effect of an extra Bank Holiday actually resulted in lower spend in May than usual, and the reality of relentless interest rate rises means a hoped-for jump in sales in the first half of June has also not materialised. It’s a shame the Government hasn’t yet woken up to the economic challenges facing hospitality in particular, as I watch friends and peers close down their establishments week after week. A simple adjustment to VAT has been a quick go-to response in previous recessions and has had an instant effect. It may be that the Government is waiting for a recession to bite before introducing a VAT reduction but for too many it is already too late.”
John Lamerton, bestselling business author and lifestyle business owner atBig Idea Ventures: “The economy may have grown slightly in April but it won’t have felt like that for small businesses, which continue to operate in brutal conditions. Small businesses are really struggling and it seems no one’s coming to save them. Still recovering from multiple Covid shutdowns, and repaying their Bounce Back Loans for years to come, business owners have been dealt blow after blow. Inflation has eroded their already thin margins, which has a triple-whammy effect on small firms: suppliers have hiked prices, staff have all demanded inflation-proof pay rises while customers are all tightening their belts in response to the cost-of-living crisis. The Government’s response has been to tax small businesses at a higher rate than ever before. It seems that if a small business fails, that’s the business owner’s problem. But if a big business fails, that’s the taxpayer’s problem.”
Lucy Scott, director at Birmingham-based pay-as-you-can bakery, Lil’s Parlour: “After 12 months of being ‘the first pay-as-you-can’ bakery in the UK, amazingly the initiative no one thought would work is still here. That does not mean currently it is not a monumental struggle. Our core costs have increased 75% since this time last year and it is becoming more of an effort to stand up every day to make this work. Our average per item payment has declined by 40% but we still have people that support us by showing up, which is important. I constantly have to make tough decisions. I have streamlined our offering right down, which feels sad, but staying open for those who rely on us is more important. Our utility and ingredients bills are a constant headache but thanks to a new, supportive landlord we are working on cutting our bills by implementing a new greener energy policy. Our core income has changed from the bakery itself to running Local Authority-funded workshops. It’s hard work but this initiative runs in my blood. It’s about constantly innovating.”
Shirley Leader, director of Petersfield-based woman’s clothing boutique, Velvet & Rose: ”Our boutique is just ahead of sales from a year ago. At times, it does not feel like this. Some items sell quite easily, others you have to put in the work. Customers are certainly shopping around. Wholesale prices are going up all the time and we have to decide whether to them pass on, absorb them or find another brand. The pressure is intense and it can be quite stressful having all of this at the back of your mind all of the time. Customers are not aware of the thought process a small business has to work through. Meanwhile, the Government is making it hard to access funds. We recently got told that we had to create an industry association with a bank account to access any money. This takes time to set up and the concern is that many more businesses will close in the meantime. The next quarter will be more of a challenge as customers are not traveling so much but we are hoping that we will have a strong finish to the year as we continue to adapt and be agile.”
Jonah Werth, co-founder at hospitality tech platform, Blend: “It was reported recently that a third of hospitality firms are expected to fold as inflation kills the restaurant sector. Post-Brexit, the hospitality industry is facing a staffing crisis like no other and there is huge pressure on the industry to invest in growing young British talent and explore immigration opportunities to plug the gap. My start-up Blend is on a mission to onboard both students and foreign workers into hospitality more efficiently, through video-first gamification. There is a huge job to be done to onboard, train and grow the future of this great industry. Our customers need a workforce fit and ready for the job, and with the cost of eating out expected to rise even further, the demand for exceptional customer service is stronger than ever.”
