How to make your business a great place to work - Niamh McLaughlin

For small businesses across the North, sky-rocketing inflation has created a major hurdle to overcome – forcing many to adjust their corporate strategy in order to combat its impact.

As part of our latest Small Business Monitor research*, we took the views of senior SME decision makers across the North East, North-West and Yorkshire and Humberside, looking at their current and future plans from financial, operational and staffing points of view More than a third (37 per cent) of smaller firms we engaged with across the region cited inflation as one of the top three challenges facing their business over the next 12 months. Following this were a range of other concerns, including rising business rates (27 per cent), sourcing and recruiting quality talent (22 per cent) and supply chain complexities (21 per cent). Looking after employee wellbeing (20 per cent) was also cited as a pertinent challenge.

For many SME senior decision makers, their response to high inflation comes down to pure day-to-day finances, with more than a third (39 per cent) of firms across the North saying they will be looking to increase the cost of products and/or services, while 33 per cent were exploring cheaper means of sourcing goods.

Our research also found that SMEs’ investment plans could also be hit hard. Some 15 per cent of respondents in the region said they were putting plans to invest in the business on hold due to high inflation, while 12 per cent were scrapping investment plans.

Against this backdrop, redundancies or cuts to working hours could be on the horizon. While one in 10 (11 per cent) of firms expected to lay off staff as a result of rising inflation, the same number (11 per cent) said they were looking at reducing hours. Some six per cent were looking at cutting salaries and benefits, while eight per cent of firms were expecting to expand pay and rewards.

Despite the threat of inflation, there is clear optimism regarding income among businesses within North England. More than four in 10 (42 per cent) of SMEs expect revenue to increase in the next 12 months, while only 29 per cent of firms expect it to reduce. A quarter (24 per cent) predict income will remain at the same level. So, what does all of this mean for northern small businesses and their employees?

While there is clear positivity from firms in terms of business income, the outlook remains very unclear two years on from the first UK lockdown. Not only are smaller businesses feeling the effects of rising prices and bills, but they are also grappling with issues such as supply chain constraints and labour shortages.

It is going to be of utmost importance to ensure any available budget is being allocated to the areas that will have the biggest impact on the overall health of the business.

At a time when rising costs may impact companies’ ability to increase salaries, how employers help staff manage the impact of inflation on their own finances could well impact their decision to stay and strive to support the company long-term. This means a robust benefits and wellbeing strategy is certainly not an area to be overlooked right now.

To be successful here means a real commitment to making the business a great place to work. Benefits to staff such as flexible working, training and development, and maintaining a strong culture of engagement are all vital to help maintain their direction. Backing these up with effective tools for financial and wider life support is a great approach, not only to for existing employees, but to encourage others to be part of the journey going forward.