Over half (54%) of SME owners will have to close, put plans on hold, or be forced to find other employment if they don’t have a successful festive trading period this year. The findings come at the end of another challenging year for small businesses who have been hit harder than most by the ongoing instability of the British economy.
Festive shopping a lifeline for small businesses
New research by small business insurance provider, Simply Business, has found that the festive period is vital for SMEs with 40% of SME owners stating that over 20% of their annual takings take place over the festive trading period alone.
The festive trading period is often a lifeline for many small businesses but the landscape is looking very different this year. In the lead up to December, small business owners reported their top three concerns: rising costs and inflation (69%), not being able to pay their bills (49%) and a negative change in consumer confidence and spending (44%).
Almost four in five (79%) small business owners have reaffirmed how important it is for consumers to shop locally and support independent businesses over Christmas – two in five (38%) say that it is ‘absolutely critical’ for the future of their business.
In the short term, a fifth (21%) of small business owners say they will have to scale back their families’ festive celebrations as a result of money being tight.
Caitrin Kincaid, owner of Cube Fun in Northern Ireland said: “As a kids toy business, Christmas is absolutely crucial in respect of sales, and competing with the big guys within the toy industry is very challenging for a small business owner like me. Last Christmas, my small business was severely hindered by the cost of living crisis and the Royal Mail strikes. This year I am relying heavily on Christmas sales to keep the business afloat going into 2024.”
Small businesses facing shoplifting epidemic
Small businesses are facing a plethora of challenges in the run up to Christmas and the recent surge in shoplifting across the UK is directly impacting independent retailers – half of small business owners (50%) have reported shoplifting as a problem.
The research found that over half (57%) of respondents have lost over £250 to shoplifting this year alone, with almost a fifth (16%) saying they have lost between £1,001-£5,000. Naturally, this can disproportionately impact smaller businesses who simply do not have the financial reserves to be able to just write this stock off.
As a result, many small businesses have been forced to implement measures to prevent shoplifting, including: enhanced surveillance with CCTV cameras (34%), increased staff presence and customer engagement (30%) and joining forces with other local shops to spot and report a crime (20%).
The additional costs small businesses are facing as a result of shoplifting comes at a time when they are stretched more than ever. Recent findings from the Simply Business SME Insights Report* found that over half (52%) of SMEs anticipate a decrease in profits by up to 20% by the end of 2023 versus the previous year. Over a quarter (27%) are resorting to using personal savings to prop up their business amidst the challenges they are facing. Meanwhile, nearly a third (29%) of businesses are seeking bank loans and 23% are seeking a loan from family and friends to support their operations.
Alan Thomas, UK CEO at Simply Business, said: “Small businesses have been dealt a very challenging hand in 2023, with rising energy costs and business rates limiting growth opportunities for many. The festive trading period is a lifeline for many small business owners – four in five stress how important it is to shop locally and support small businesses over Christmas – and we encourage consumers to think about them when doing their shopping this year. Small businesses are the lifeblood of our local communities, and with over five million of them in the UK, together they contribute trillions of pounds to the economy. They are quite simply the backbone of the economy and need our support more than ever.”
