More than two thirds (68%) of London SME owners anticipate the current supply chain issues and staff shortages to only get worse before they get better, according to a new report.
The Staffing and supply report carried out by card payments specialist takepayments limited, surveyed SME business owners across the capital to uncover how the current staff shortages and supply chain crisis is affecting small businesses.
The survey findings reveal that more than half (54%) of small businesses have experienced supply chain issues while nearly three in five (59%) have experienced staff shortages over the past year.
More than half (54%) of business owners surveyed said the combination of staff shortages and supply chain issues have already caused a negative financial impact on their business and around one in three (29%) describe the financial impact as significant or critical to their business.
Half (50%) of those surveyed in London said if the staff shortages and supply issues were set to continue into 2022 then there is a strong chance their business wouldn’t survive, as more than two thirds (67%) think these issues are set to continue for more than a year.
As we approach what is usually the busiest time of year for business owners, over two thirds (67%) think the supply chain and staff shortages are going to impact their clients or customers over the festive season, in particular businesses within the hospitality sector (46%) closely followed by the food and drink sector (44%).
When asked what support small business owners would like to see from the government to help them financially navigate through the supply chain issues and staff shortages, government paid training programmes came out on top (41%).
This was followed by tax breaks for small businesses (39%) as well as emergency visas (33%) and the permanent relaxation of immigration rules (32%).
One in four (24%) London business owners state shortage of haulage and delivery drivers has negatively impacted their business this year
The financial implications the supply chain issues are having on small business owners is also leading to a knock on effect to consumers, as one in five (19%) businesses said they have had to increase their prices for customers as a result of supply shortages and a further one in four (25%) expect to increase their prices to cover the supply chain problems within the next 3 months.
Of the London based SME’s who have already increased their prices, 19% stated they have raised them by a staggering 5-10% and prices within the warehouse sector are most likely to see the biggest rise as one in four (25%) said they have increased their prices by an eyewatering 20-30% due to supply chain issues.
Nearly half (46%) of small businesses in London said staff shortages have negatively financially impacted their business
Regarding staff shortages, the report revealed 18% of small businesses have had to reduce their trading hours due to not having sufficient staff number and a further 24% expect to reduce their hours in the next 3 months and 20% in the next 6 months.
As well as reducing the number of hours they are trading, 18 % of London based SME owners said they have had to reduce production of their stock and a further 18% said they have limited or changed the services they offer due to staff shortages.
Despite 46% of small businesses stating staff shortages have negatively impacted their business financially, nearly a third (29%) of small business owners said they expect to increase salaries for open vacancies in the next three months in a bid to fill vacancies.
Already, 16% of small business owners said they have increased their staff salaries by 5-10%, 19% have increased them by 10-20% and 14% increased them by a staggering 20-30%.
Businesses within the food and drink sector have seen the biggest increase in salaries with 15% increasing their wages by a staggering 50-100%.
To cover the financial strain due to staff shortages, one in four (25%) London based business owners admit they have already raised prices for consumers and 18% expect to do this in the next 3 months.
Sandra Rowley at card payment solutions provider takepayments limited said, “Our report suggests businesses are delaying their growth plans due to supply chain issues or staffing shortages (25%), this means businesses could be growing at a slower rate.
Until the supply and staff shortage issues are overcome, small business owners across the UK could continue to be hit by negative financial implications which may ultimately lead to further increases in consumer prices.
Small businesses are calling on the government to introduce a tax break to help them financially navigate through this climate. This support would help relieve the financial pressures small businesses are facing, whether it’s increased stock costs due to supply issues or increasing salaries to attract staff.”