Three in four small firms scrap growth plans as costs soar

Small business growth crisis threatens Britain’s high streets

Three in four high-street businesses have cancelled plans to grow this year as the money earmarked for new staff, equipment and customers disappears into soaring bills and taxes. Now another energy shock threatens to make matters worse. The Government says it wants growth, but Britain’s smallest businesses are warning the Chancellor that unless the Budget gives them room to breathe, there may be precious little growth left to deliver.

GROWTH SWALLOWED BY RISING COSTS

Three in four high‑street businesses cancelled plans to grow this year.

The Government wants growth, the UK needs growth and the Budget is the chance to build it into the system.

However, the runes aren’t positive. Oil and energy prices are through the roof because of the Middle East conflict and speculation has been rife over the last few days that the Chancellor might have to turn the speech on 28th Oct into an emergency budget. That would snuff out hundreds of thousands of small and micro businesses that are already squeaking loudly. The sector is pleading with him not to do anything that would make their situation worse because, ultimately, he can’t have an economy, never mind a growing one without them. 

When John Lewis feels the squeeze, it makes headlines. When small retailers feel it, it threatens the future of the high street.

More than three in four high‑street businesses shelved a plan to grow this year. The money they had set aside for a new people, new equipment, or attracting new customers didn’t go into growth, it went into bills and taxes.

526 small businesses contributed to Growth on hold, the new report published today by Enterprise Nation, Square, and EDF Small Business. The findings show small businesses are carrying seven major costs at once, and relief on one still leaves them paying the other six. Just over a quarter of those thought about closing.

This is not a sector pausing growth by choice; it’s a sector forced into survival mode.

Extra costs

Gabriel Larraz, co‑founder of Broken Eggs, summed up the experience of many at a recent roundtable saying: “The amount of volume that we’ve grown this year has basically all gone to paying extra costs.”

He was one of a dozen high‑street owners from hospitality and retail, who sat around the table with The Lord Leong CBE, Minister for Small Business, and officials from across government.

Their message was on the nail: this year has cost small and micro businesses too much and we cannot plan for the next two years when we’re fighting to survive the next two months.

This isn’t a new message. Various reports over the last few months have been coming out with similar conclusions. The Government has to listen.

Out of Breath

The report shows a sector squeezed from every direction:

Seven major costs rising at once

Energy, rent, wages, insurance, stock, tax, and borrowing costs are all rising faster than revenue.

Growth budgets wiped out

Money meant for expansion is being swallowed by bills.

Low awareness of support

Three quarters of businesses had never heard of the grants available to help them cut energy costs.

Closures on the horizon

More than a quarter considered shutting their doors this year. This is the lived reality behind the statistics, and behind every empty shopfront.

The Budget

The report makes six recommendations, none of which require government to start from scratch. They are practical, targeted and deliverable now. As we’ve been saying regularly at Business111 small and micro businesses need:

• lower employer costs

• help with energy bills

• simpler routes to finance

• support for digital adoption

• fairer tax treatment for investment

• a stable environment to plan ahead

Growth Engine

When big retailers struggle, they can absorb losses. When small retailers struggle, they cut employees, cancel investment, and eventually close.

Small and micro businesses anchor high streets, employ local people and reinvest locally. Without them local communities and economies fade and fragment. Small and micro businesses support apprenticeships, create community wealth and keep money circulating in local economies. If they can’t grow, the UK can’t grow.

On top of all that small and micro businesses drive innovation. Getting new ideas to market is the real strength of the sector and it takes entrepreneurs to be willing to take risks and invest their own money, That’s what drives growth, productivity and create jobs. In this current climate there’s no incentive whatsoever to take those risks and be entrepreneurial.

Support not Revolution

Growth is on hold, not because small businesses lack ambition, but because the cost of doing business has become too high, too unpredictable, and too exhausting.

The Chancellor’s Budget on 28 October is the moment to change that. A real emergency budget needs to put small and micro businesses at its heart. There’s no need for anything revolutionary; just breathing space, clarity, and support that actually reaches them before it’s too late.

When small businesses can plan, invest, take on more people and grow, the whole country grows with them.

Forget growth – small businesses are fighting to survive

Britain’s smallest businesses are abandoning expansion as soaring costs swallow the money they should be investing in jobs, equipment and new customers. More than three quarters of high-street firms surveyed have shelved growth plans this year and more than a quarter have considered closing. With another energy shock looming, the Chancellor now faces a simple question: how can Britain grow if its small businesses can’t?

The Government talks constantly about growth. But for thousands of small and micro businesses, growth has become a luxury they simply cannot afford.