An extensive report into market sentiment has revealed that more than a quarter (28%) of organisations in the South West have made redundancies in the last year.
The report shows that businesses of all sizes have faced a series of challenges in the last 12 months. The South-West Market Research Report was commissioned by Monahans, the area’s leading accountancy and business advisory firm, with the research undertaken by Atomik Research, surveying management teams, senior executives, and business owners at more than 300 micro, small, medium, and med/large-scale enterprises throughout the region.
Chiefly, rising inflation and operational costs, and reductions in spending as a result of interest rates soaring over 5%, have been a major issue for two in five (42%) of businesses in the region. Small businesses, with 11-50 employees, have been most significantly affected by this, with almost half (46%) citing it as their biggest challenge. Businesses of all sizes predict this to continue being the most significant barrier to progress in the next six months.
Across the different sectors surveyed, hospitality and tourism have been most heavily affected by this particular issue; 56% of businesses reported it as their primary concern in the last 12 months. This figure was, however, trumped by energy prices, which 67% of companies stated was the sector’s biggest challenge.
However, despite turbulent market conditions, micro and small businesses have largely avoided laying off staff. This has been more prominent across medium/large businesses (between 250 and 500 employees), with 45% making redundancies and the headcount of those who have done so dropping by a fifth (19%).
In contrast, generating new business has been the most significant challenge faced by micro businesses (1-10 employees), but fewer than one in ten (8%) has made redundancies. These companies are generally, however, faring worse than larger organisations.
Only a third (31%) of micro-businesses believe they are in a better position than 12 months ago and this figure is outweighed by 35% believing they are in a worse position. Comparatively, the majority of small (70%), medium (57%), and med/large (73%) businesses reported being in a better position than last year. The survey therefore showed the majority (55%) feeling positive, compared to the previous 12 months.
Despite this slight anomaly amongst micro-businesses, sentiment across the market is largely positive. When asked to rate the buoyancy of the market out of ten (one being very poor and ten being extremely good), the average score across micro businesses was 5.9, but it was higher than 7 across other business sizes, for an average score of 7.0.
Across different industries, the average buoyancy score was lowest (6.2) amongst charity and not-for-profit organisations and highest (8.2) for those in the energy sector.
Furthermore, turnover has largely increased across the board, and businesses can be buoyed by improving market conditions as the economy stabilises. Half (47%) of all businesses saw an increase in turnover, by an average of 31.5%, where only one in five (19%) reported a decrease.
Simon Tombs, Managing Partner of Monahans, said, “It is indisputable that businesses of all sizes have faced significant challenges over the last 12 months, whether that’s inflation and changing customer behaviours, energy prices or other issues coming to the fore such as data management and digital transformation.
“However, businesses are largely optimistic and they should be. Half of businesses reporting increased turnover in turbulent financial conditions is extremely positive, as it shows that they have been able to ride out some tough times and will likely make hay when the sun begins to shine again. Certainly, we are positive about the outcomes of our clients at Monahans and will continue to support them to manage cash flow, implement strong financial plans, be aware of changing market regulations, and retain optimism.”
To download the full report, visit the Monahans website: https://www.monahans.co.uk/publications/swresearch-july24
Pictured above: Simon Tombs, Managing Partner, Monahans
