Small businesses forecasting sales and profit growth despite recessionary fears

Almost half of the UK’s small business owners are forecasting a rise in revenues this year, with one in three expecting to see at least a 10 per cent jump in profits, new research suggests.

Businesses acknowledged the impact of financial threats such as rising inflation (41 per cent), followed by the decline in consumer spend (38 per cent), rising energy costs (36 per cent), wage inflation (22 per cent) and cash flow management issues (19 per cent), according to the survey from banking giant HSBC UK. However, more than two thirds (76 per cent ) of business owners said they had solutions in place to tackle these challenges. Nearly half (45 per cent) plan to increase prices and about one in five (23 per cent) are reducing their energy consumption.

Peter McIntyre, head of business banking at HSBC UK, said: “Despite the challenges of a turbulent economic climate in 2022, small businesses are displaying strong signs of resilience and growth. HSBC UK remains committed to supporting customers with their growth plans as well as helping them to mitigate financial risk. A big part of that is providing the tools and information to help customers improve cash flow management, tackle supply chain issues and manage their overheads such as energy costs.”

The bank’s research also found that 26 per cent of small business owners are reporting that cost-of-living pressures are causing a decline in their wellbeing. HSBC said its “early warning signs” team has been proactively contacting customers that could be entering into financial difficulty to discuss how the bank can help.