The country’s smallest companies are largely avoiding international expansion and keeping their ambitions local, according to new research.
Despite changes to workers’ rights, most microbusinesses (those with fewer than 10 full-time employees) say they are optimistic about their business’s growth over the next two years.
Many small businesses, rather than focusing on national or even international expansion, look closer to home.
A survey by Zempler Bank found that 27 per cent of businesses prefer local or regional growth, while 17 per cent are eyeing expansion across the UK.
The survey found that those with between 6 and 10 employees are more likely to pursue national growth.
Only 12 percent of small businesses said their main goal was to expand internationally.
Bet on growth: small businesses prefer local expansion to international expansion
It will be good news for the Chancellor, who has set her sights on an aggressive growth agenda to revive the economy against a backdrop of rising bond yields, which threaten tax rises or spending cuts.
And while companies have ambitious goals, including launching new products and services, concerns about growth are intensifying.
Of companies that expect modest growth (54 percent) or have no ambition to grow (24 percent), more than a quarter say economic obstacles are the biggest impediment.
This figure rises to 35 percent for both retail and hair and beauty businesses, while only 17 percent of professional services businesses – which include finance and legal services – are concerned about the economy.
Rich Wagner, chief executive of Zempler Bank, says: ‘Our research into micro businesses and sole traders offers a fascinating insight into the hopes and fears of the UK’s smallest businesses. Most are optimistic, pragmatic and share concerns about the economy and their family life.
“It’s remarkably refreshing and highlights that work isn’t always necessarily about money, but sometimes about improving the business and doing something new.”
It comes as a recent survey by the Federation of Small Businesses showed that 32 per cent of respondents plan to reduce staff as a result of the Employment Rights Bill.
More than 90 per cent of members said they were concerned about the bill, with many citing fear of being sued under changes to unfair dismissal legislation.
Worries about running a business are filtering into other aspects of their life, with 66 percent expressing concern about the impact on their mental health, according to Zempler Bank.
Of companies expecting significant growth, 40 percent highlighted continued demand for products and services, while 27 percent said they had been able to increase prices to customers.
Looking ahead to the next financial year, some small businesses could be hit by increases in statutory sick pay and parental pay, although most will be protected from changes to National Insurance contributions.
Wagner adds: ‘Although sole traders and some micro-businesses are protected from some of the upcoming tax changes, these changes will continue to impact smaller businesses more.
‘Smaller companies often do not have the ability to absorb these additional costs or pass them on to customers as larger companies do. Understandably, those who operate on thin margins begin to wonder if it’s worth the effort.
“That said, I am constantly impressed by the positivity and resilience of UK business owners… I hope we still see that positivity and that more people see the value in starting their own business.”
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