Financial troubles, uncertainty and business taxes are all taking their toll on entrepreneurs and prompting an increase in those looking to downsize, sell or close their businesses, a new study has revealed.
The Federation of Small Businesses (FSB) found the percentage of respondents looking for an exit strategy from their enterprise to be at the highest level (13%) since they began tracking in 2012.
1,230 members of the FSB were surveyed as part of the Small Business Index. When it was last released in July, the confidence index fell to 1 from 15.
Mike Cherry, FSB National Chairman, said:
“Rising inflationary pressure and a weakening domestic economy are the twin drivers of plummeting confidence among small firms and consumers alike. With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.
“A record proportion of business owners currently expect to downsize, sell or shut up shop, while rent and taxation are frequently mentioned as causes of increased costs. We need to see more support in this space – that includes ending enforcement of the ridiculous ‘staircase tax’. “
“Staircase tax” refers to extra business rates paid by some firms that have an office divided by a staircase.
SMEs with more than one floor in the same building may face a rate increase of up to £15,000 due to the new tax. Firms in England will see rates backdated to 2015 while businesses in Wales will have the tax backdated all the way to 2010.
However, it’s not all doom and gloom with the survey noting that confidence has been rising among exporters, with 40% enjoying an increase in sales overseas.
Head of Finance at Businesscomparison.com, Laura Thomas comments:
“Financial pressures can be overwhelming and it can be difficult for business owners to get help from traditional lenders. Hopefully the confidence felt by exporters will begin to extend to other sectors, to see an 40% increase in sales even in the shadow of Brexit, is extremely positive. We would hope that the Chancellor will address the issue of business tax in his upcoming Budget, especially the staircase tax which would have a huge negative impact on many SMEs if enforced.”