Increased costs impacting business viability was cited by Cumbrian business owners as the main challenge impacting their growth over the next three years.
This was one of the key findings in the latest Family, Privately Owned and Owner-managed Business Survey by Armstrong Watson, which received responses from 172 Cumbrian businesses.
32% of business owners are also worried about marketplace competition as a challenge to growth over the next three years, while both staff recruitment and cashflow are also major concerns for 30%.
Across all businesses who participated nationally in the survey, 49% were also worried about the impact of the increase in the National Minimum Wage (NMW) and National Living Wage (NLW). 39% of respondents suggested the new hourly rates – NLW has increased by almost 10% and the NMW rate for under 18s and apprentices has increased by more than 21% – would affect their business, with 11% stating the impact would be ‘significant’.
The survey provides valuable insights into the challenges family and owner-managed businesses face and how they are being impacted. Running November to December 2023, 300 business owners shared their views about the impact of recruitment challenges, how they are adapting to the evolving digital world and how they plan to innovate and grow. They also shared their concerns about the impact of external pressures and the issues that will impact business growth over the next three years.
The Family, Privately Owned, and Owner Managed Business Survey – marking five years since the previous survey, and the third to be carried out by the accountancy, business and financial advisory firm – found that a third of all businesses find it ‘very difficult to recruit’. This is up 8% from the last survey in 2018, despite 65% making changes to help with recruitment.
More than a third of Cumbrian businesses say they find it very difficult to recruit and 51% sometimes struggle to recruit, in line with the overall response, but Cumbria seems to be facing a bigger issue when it comes to finding suitable and skilled candidates, with 74% who claim this is the main reason recruitment can be difficult.
On a more positive note, fewer businesses (across the country) than in 2018 said retention is an issue for them, with 37% taking action to keep staff, including 71% of those increasing salaries above inflation and just under half who have introduced flexible working arrangements.
When it comes to technology, the survey found that 22% of all businesses are using AI, while a further 11% are considering it, but more than half don’t believe it is relevant to their business.
Looking ahead, 73% of business owners are somewhat concerned (54%) or very concerned (21%) about inflationary pressures on business costs during the next 12 months, and the impact of increased costs on viability was listed as the biggest challenge to business growth over the next three years, according to 44% of all respondents, though this is 6% higher in Cumbria.
Paul Dickson, Armstrong Watson’s chief executive and managing partner, said: “Our latest survey has revealed some critical insights into the current landscape of family owned, privately owned, and owner-managed businesses and how challenges over the past five years – the Covid-19 pandemic, labour shortages, supply chain disruptions, inflation and the cost-of-living crisis – have affected these businesses.
“The widespread impact of the increase to the National Minimum Wage and National Living Wage – which will see payroll costs increase across the board – is one key challenge faced in balancing fair wages with sustainable growth.
“The ongoing struggle with talent acquisition, despite many making changes to aid recruitment, indicates a growing challenge in the labour market but it is positive to see that the data shows businesses are taking proactive steps to retain staff.
“While AI adoption is still in its early stages with some already implementing it and others considering it, it’s clear that digital transformation is on the horizon. However, there is still work to be done and business owners will need to take action to ensure they’re not left behind.
“These findings highlight the resilience, adaptability, and innovative spirit of family owned, privately owned, and owner-managed businesses and also areas in which they might need support. Despite facing numerous challenges, they continue to evolve and adapt, demonstrating their crucial role in our economy.
“Thank you to those in Cumbria who took the time to share their views.”
To view the full report visit www.armstrongwatson.info/survey24.
