Cost-of-living puts 630,000 businesses at risk

630,000 small and micro businesses could go bust this year, as the cost-of-living crisis puts unprecedented pressure on entrepreneurs trying to stay afloat according to new research by website builder GoDaddy

Data analysis of 2.3 million British micro businesses revealed that more than one in nine (12%) fear closure before the end of 2023, which could wipe £12 billion off the UK economy. 

With the Spring Budget just 10 days away, the research shows that fewer than one in five (19%) entrepreneurs believe that Rishi Sunak is acting in the best interests of small and microbusinesses.

The data showing that the microbusiness community – businesses with 10 employees or fewer – contributes £98bn to the national economy annually. The sector also supports more than six million jobs, with 17% of the UK’s 5.2 million microbusinesses employing at least one other person.

More than three quarters (77%) of entrepreneurs say that the cost-of-living crisis is the greatest challenge they’ve faced. Rising costs are the biggest issue of concern with energy bills (80%) as the most prominent, followed by transport costs (44%) and the cost of raw materials (43%).

When asked how MPs can help microbusinesses, the most common response was to offer tax incentives (42%), followed by technical assistance for business development and help with digital strategy (both 36%). More than a third (35%) surveyed said access to capital, while three in 10 (30%) asked for subsidised/affordable rent.

The data also shows that the cost-of-living crisis disproportionately impacts micro businesses owned by underrepresented entrepreneurs. 85% of Black entrepreneurs say it’s the worst time they can remember, and 84% of Asian entrepreneurs: compared with 75% of white entrepreneurs, shared similar concerns.

Meanwhile, 75% of white microbusiness owners are confident they will survive until the end of 2023. This figure falls to 69% and 68% for black and Asian entrepreneurs respectively.

However, there is cause for some optimism when comparing against last year’s Venture Forward Data. Black founders accounted for 5.4% of pre-pandemic businesses, which rose to 6.6% among those started in 2021. This figure has risen to 7.3% for microbusinesses started in 2022, showing a clear upward trend for black entrepreneurs

Andrew Gradon, head of GoDaddy UK & Ireland, said “The reesarcg demonstrates the enormous contributions made by Britain’s microbusinesses. They have the power to add billions to the economy, while providing jobs and opportunity in their local communities. When they thrive, we all do.”

“But the research also reveals the potentially disastrous consequences that the cost-of-living crisis could have on them. With more than 600,000 microbusinesses saying that they feel at risk of going under this year, it is crucial that they are given adequate support to help negate the rising cost of doing business.”

“We have very few studies that focus specifically on companies with under 10 employees. They are under-researched, misunderstood and often under-served. GoDaddy aims to change that, and we are determined to support and empower the everyday entrepreneurs that are the engine of the British economy.”