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The economy and your small business or charity

ended 11. August 2022

On Friday morning at 07:00, we're getting the official economic data for the second quarter of the year. Many expect it to be bad, i.e. to show the economy is shrinking. It will likely dominate the media on Friday and over the weekend. Please answer any or all of the following questions: 

  • How were things for your business or charity in the second three months of 2022 compared to the first three months? Better, worse, the same - and why?
  • Are you worried about the future of your business or charity given soaring inflation and an expected recession lasting five quarters (or more)? What are the main challenges you're facing?
  • It's bad enough already. What are you doing to prepare yourself for the even worse economic storm that the Bank of England predicts lies ahead?
  • How is your mental health being affected by the current economic crisis?
  • Many Newspagers are suggesting a serious mental health crisis is looming (if not here already) due to the constant stress of the past two and a half years. Do you agree? Are you seeing signs of it?
  • What should the Government and/or Bank of England do to try and support small businesses and charities?
  • Do you feel there is enough urgency in Government to deal with the current economic crisis, or does the country feel rudderless?

Any other thoughts, jot them down. We'll do our best to get your voices into the local and national media on Friday. 

11 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
We have seen a decline in customers in the second quarter of the year. Those wanting to buy new homes have declined as well as people moving houses. If inflation remains stubbornly high and interest rates continue to rise there will undoubtedly be a prolonged recession. This will mean stagnation, if not a decline, in the housing market similar to 2009. Its just common sense that the worse the economy, the more mental health referrals are made. This is because the stress of losing a job, not being able to afford your bills or taking on too much debt is really damaging. I would advise anyone in this position to speak to a debt charity like Stepchange. The relief of dealing with problems surrounding money can be life changing. The government are stuck in paralysis for the next five weeks until a new leader is elected. Once a new Prime Minister is in office they should really take charge of the cost of living crisis. A reduction in fuel duty and further help with energy bills should be forthcoming. Both are deflationary, as businesses pass on the cost of higher fuel bills to customers.
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Mary Maguire
Managing Director at Astute Recruitment Ltd
• How were things for your business or charity in the second three months of 2022 compared to the first three months? Better, worse, the same? Recruitment firms can be a bit of a bellwether for the economy, and interestingly in an August when we would typically quieten down, the opposite seems to be happening! Our Q2 was stronger than Q1 and Q3 seems on par with Q2. Reasons? We specialise in accountancy recruitment. I’ve noticed that the key roles are either very technical financial accountants with demand also very strong for commercial/ cost/ management accountants who are experts in business partnering and managing cashflows. As costs skyrocket, it seems wise business owners want to ensure they have their fingers on tight cost controls against their budgets. They also seem more than willing to pay to get the right financial talent in their team. Many manufacturing businesses had already started increasing their costs many months ago against increasing costs of raw materials. They have wisely been able to pass on rising factory gate costs to their customers. However, this is a recipe where inflation is merely being baked in to rise ever higher down the line. • What should the Government and/or Bank of England do to try and support small businesses and charities? During the height of COVID and lockdowns, the Governments furlough scheme was key to the survival of many thousands of SMEs. We saw this ourselves, utilised the scheme properly and were able to keep our talented team together without making redundancies. 1000’s of other SMEs did the same. The Government must act fast and incisively again. How? • Corporation tax should be held at 19%, • Employer’s AND Employee’s NI should be reduced – even if as a temporary measure until April 2023. • Why not give firms tax deduction opportunities against cost-of-living fuel payments they make to staff? (A windfall tax against the Big energy suppliers who have enjoyed unprecedented profits this year could pay for this. 😊) • Do you feel there is enough urgency in Government to deal with the current economic crisis, or does the country feel rudderless? The best leaders are the ones who can react swiftly and decisively. Business HATES indecision as do the economy, and money markets. At the moment we do seem to be rudderless economically until the next PM is elected. A vacuum of non-urgency stagnates throughout Parliament, from now until September. Time that SME companies, charities and UK Plc simply do not have. Business owners and their senior management teams have to make key decisions EVERY day. If my business partner and I were to simply disappear for 6 weeks, I doubt we would have much of a business left on our return! With unprecedented headwinds – we need strong leadership NOW. • Are you worried about the future of your business or charity given soaring inflation and an expected recession lasting five quarters (or more)? What are the main challenges you're facing? Having started up a business in the 2008 financial crash, weathered the Pandemic and other upheavals, we are now in a much stronger position to ride things out and even grow. So are a lot of businesses. My worst fear is that MPs, Economists, the IMF and others actually talk us into a recession with their relentless tide of doom being washed up in the Media. In 2008, we talked ourselves into NO liquidity for desperate cash-hungry businesses to keep afloat. I saw this time and again. Brilliant companies reduced to ashes who just needed more cash support from the banks when none was available. Yes – inflation is a deep concern but we have a much lower level of unemployment than before entering a period of uncertainty. Where are the success stories? The SMEs in the Midlands and elsewhere out-performing expectations despite everything? They are out there but no one seems to shout about those. Making acquisitions, recruiting and growing their teams. “Stupid is as stupid does” – thanks My Gump! If we continue to allow a tsunami of doom-laden economic news to engulf our shores, we will be letting more than our bank accounts dampen. Our spirits will fall. We will be much more likely to allow ourselves to fall into despair, worsening mental health and more. We will indeed be very stupid.
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Premium
Dr Marianne Trent
Clinical Psychologist at Good Thinking Psychology
"The pressures of the last 2 and a half years have allowed growth and change for some and hardship and strain for others. With the first lockdown came furlough. In some cases this gave people the chance to do what made them happy and kept them rested. It also gave others the time and head space to be able to access therapy to start to unpick longstanding patterns, habits and traumas to be able to move forwards with struggles. Generally speaking, initially it seemed that costs decreased for people. The weather was suddenly warm so energy bills were lower, there were reduced commuting costs and very few shops open to spend any money in. There seemed to be a sense of camaraderie and being in it together which made things seem manageable and gave a spark of hope. However, fast forward to summer 2022: energy costs are at a record high, financial support for people and businesses has long since ended and people are feeling the strain. Those working in full time employment on minimum wage are struggling to pay their bills and in some cases are considering reducing paid hours to fall within the threshold for universal credit. The national trend for NHS mental health services waiting times appears to be as long as ever. Due to this, parents aren't sure how best to support their young people's difficulties and are feeling lost and scared. This can also impact on their own mental health. Speaking as a mental health professional, it feels like we are currently glimpsing the October fuel hike on the horizon. My colleagues and I are fearful of how stretched people and systems are going to cope with this next major bump in the road and what the economic, physical and mental health fall out will be."
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Ed Rimmer
CEO at Time Finance
We need more urgency from the Government. While two contenders vie for the position of Prime Minister, each suggesting a different course of action, businesses are hanging in the balance and the cost-of-living crisis is worsening. Over the past six months, there has been a significant shift in business optimism. At the end of last year, the firms we spoke with were optimistic about the future, with one-third planning to invest in and expand their workforce. Fast forward six months and it's a very different outlook. One in every ten businesses claim they are struggling to keep up with their current financial responsibilities, much alone take on more. Unless something is done quickly, our economic recovery with worsen and those businesses won’t survive. Employers are under a lot of pressure right now. Many simply aren't able to raise their earnings to keep up with the rising cost of living, and as a result, we're locked in a vicious cycle. Now, drastic action is required to pull us out of it.
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Sarah Newland
Founder at Keyboard Smash
In the current economic climate, buying decisions from clients are extremely slow. Leads are fewer, cash flow is tighter and more clients are reneging on contracts or finding reasons not to pay. We've tightened up on our contracts and are focusing on promoting lower cost services. We have also committed to paying the freelancers in our agency in 7 days, regardless of whether the cash has come in. The Government should be undertaking discussions with small businesses so they appreciate the crunch we're under, rather than creating blanket proposals that don't affect the people on the ground.
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Esme Marshwitch
Owner at The Glassy Witch
My "micro" business is basically hibernating. I have been able to secure a new job which means I can mothball the business but keep creating, for now at least. This country is staggering in to a recession, and instead of putting their heads together as a full parliament to consider how best to get the people through it, members of the current party of government are much more interested in squabbling over job titles. Meanwhile, the people face the most desperate situations with a sense of resignation. It never needed to be like this. Fair and appropriate taxation of all individuals and companies would have done a lot to soften the blows that keep on coming right now. Instead, successive politicians worked out how to give themselves, their friends, family, and cronies an easy ride at the expense of the rest of us. It's very easy to become despondent. Even when caught out in lies, our politicians carry on. And if we the people dare to consider exercising our right to protest? Either some politician somewhere tries to make doing to illegal, or some idiots inveigle their way in to cause trouble and make any such protest appear invalid. With the loss of consequence to misbehaviour, in public office and private interaction, things will only continue to spiral, impacting the most vulnerable hardest. It is time for Parliament to work as one, to find solutions to the dire situation we are now in. I don't care which ribbon they wear, these people were voted in to look after the interests of their constituents. If they are not doing that, boot them out.
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Legend
Jenny Blyth
Small business owner at Storm in a Teacup Gifts
This country is on the verge of a mental health crisis that it is not equipped to handle. We have a generation of children growing up seeing their parents and carers dealing with exceptional stress and we have adults who are increasingly depressed, anxious and stressed with nowhere to turn. The NHS does not have the facilities to deal with an influx of mental illness and the current services are ill-equipped. We have waiting lists for therapies that are over a year long and people are not going to wait. People are dying and winter is coming, its going to get worse. This government has blood on its hands. Imagine calling a crisis line for a suicidal friend to be told, ‘make them a cup of tea’, this is what is happening, this has happened to me. My customers are struggling and as a gift shop you would think its irrelevant to me, its actually the opposite. We are a shoulder to lean on, an ear for anxieties, we offer advice to services and we are currently implementing an idea to help children with their anxieties. Why am I, a small business owner, doing the job of the government and mental health services. Shadow minister for mental health Dr Rosena Khan is on the nhs frontline and knows how bad this is, why is nobody listening? People need to hear what is happening, they need to know the truth and as someone with a mental health condition myself and an advocate for a severely mentally ill woman, I want to do this. With the services as bad as they are, charities supporting mentally ill people need far more investment.
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Tahina Akther
Barrister and Co-Founder at Wildcat Law
Don't forget the families. Divorce rates in England peaked in 1993, coincidentally re-possession rates were also at their highest all time rates between 1991-1993. Was it really a coincidence? The often forgotten side of recessions are the number of broken families caused by money worries. Money may not bring happiness but rest assured not having enough money brings a lot of stress! I have already fielded more enquiries this year to date, than the whole of last year, from people looking to separate. Interestingly they are not just married/civil partners I am increasingly hearing from unmarried couples. This later group are not shown in any of the official statistics published about relationship breakdowns. If we return to anything like the pressures of the early 90's we will see breakups increasing, this impacts not only the adults involved but crucially the children of the family. Following on from the impacts of 2 years of Covid to children's mental health and education, we are at real risk of having a lost generation of children.
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Mark Richardson
Partner at BB&J Commercial
Business activity in the commercial property sector is holding up well in terms of sales and lettings. We have had one possible deal go off but generally the appetite for acquisitions is good particularly in the industrial and land sectors where there has been a lack of supply. I hope businesses are better prepared for a possible recession than last time around. That was a steep learning curve for many, and I hope the lessons haven’t been forgotten. I don’t see the government doing a great deal at the moment to intervene, but a lot of issues are outside of their control.
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Keith Budden
Managing Director at Ensurety
We saw a slight slowdown in business during the second quarter, with businesses reluctant to commit to high-ticket services due to the dark clouds of recession looming on the horizon. The main challenge for us, as for others I'm sure, is a pressing need to increase our prices if we are to cope with increasing fuel and energy prices. While our instinct is to try to hold prices stable, as otherwise we just add to the inflation spiral, if it's a choice of cliff edge or price rise, then prices will have to rise. Mentally, I'm living in the here and now and not giving too much brain space to the future. Concentrate on the next 48 hours, the rest can look after itself. Overall, the message to everyone has to be to concentrate on what is in your control, and don't waste valuable time thinking about everything outside your control. The Government should implement a price cap for all utilities. It can't be hard for Treasury boffins to work out how much energy costs to produce, add on a margin (say 20%), and set that as the maximum tariff whether for domestic, SME or industrial use. If the energy companies can't cope with that, they need to cut their cloth to fit. There is zero urgency in Government. As the economy drifts towards the rocks, Rishi and Liz are arguing over who can grab tomorrow's headlines, while Boris is like a Red Letter Day junkie. Come on leaders, get a grip, grab that rudder before the whole damn boat slams against the rocks.
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Lewis Thompson
Business Development Manager at Future Fit for Business
• How were things for your business or charity in the second three months of 2022 compared to the first three months? Better, worse, the same - and why? Our performance has actually improved thanks to real growth in some areas around health and nutrition. Many people are now more health conscious following the COVID 19 pandemic. With the current cost of living crisis training as a Personal Trainer or Nutrition Advisor also allows people to earn additional money. • Are you worried about the future of your business or charity given soaring inflation and an expected recession lasting five quarters (or more)? No, our business future is very secure. We are concerned for the people this impacts most and are looking to see how we can support in any way. We’re in the process of creating free resources open to anyone to help them with health, fitness and nutrition. We’re also focused on supporting the wider health and industry to ensure more people train and work in this area. • It's bad enough already. What are you doing to prepare yourself for the even worse economic storm that the Bank of England predicts lies ahead? We’re launching a new qualification now in Life Coaching (watch this space!). Delivering a regulated qualification to what has largely been an unregulated area of work we feel will help benefit everyone. • How is your mental health being affected by the current economic crisis? We’re working hard to care for the mental health of our staff, offering increased working flexibility to reduce commuting costs. Additionally, we’ve increase holiday leave entitlement and added new benefits to support the team. In terms of our business, we launched a mental health course at the height of the pandemic and it continues to be really popular. We’ve built on this by creating new courses that will be released this month that teach people to improve the mental health of others. • Many Newspagers are suggesting a serious mental health crisis is looming (if not here already) due to the constant stress of the past two and a half years. Do you agree? Are you seeing signs of it? Yes! When asked why they are looking to retrain so many of our learners are saying that their mental health has been massively impacted by the last few years; that they’re feeling undervalued or underpaid in their jobs and they’re looking to make a change. From nurses to teachers, so many people are looking to find a new career- particularly in an industry where the importance of holistic health is really valued. • What should the Government and/or Bank of England do to try and support small businesses and charities? Google will tell you 61% of the UK working population works for an SME, so it’s incredibly important these businesses survive. It’s important to listen to this sector and balance their needs with the different approach needed for larger companies. Supermarkets and energy suppliers can’t be making record profits and SME’s will need support – these need two different strategies not one! • Do you feel there is enough urgency in Government to deal with the current economic crisis, or does the country feel rudderless? I don’t think we feel they have much urgency on the economic crisis much like the upcoming health crisis that could likely follow. With the fitness sector currently sitting under the Department for Digital, Culture, Media and Sport, the nation’s proactive health sits in the same conversations as cinema, nightclubs and entertainment. Stop and ask yourself why the only sector that is stopping the NHS closing shortly is being overseen and regulated in the same area as entertainment venues. If we want to ensure the nations wellbeing a simple step would be to bring fitness sector into the Department of Health and Social Care!