Hundreds of thousands of the UK’s smallest businesses are at risk of bankruptcy this year as costs continue to rise, a report has found.
The owners of nearly one in eight micro-businesses, defined as employing less than 10 people, fear having to retreat, which equates to 630,000 businesses.
Catherine Sweet sells art for a living – her own and that of other artists – through her BobCat Gallery website and at exhibitions she curates.
But she mentions “a massive drop in consumer spending” coupled with rising cost of living is a disaster for businesses.
“I know my business could grow fivefold if I had a physical space, but all the negotiations I started with the owner came to nothing because I don’t have the funds right now.
“Affordable rent subsidies for commercial space would be a huge boon because for businesses like mine to have physical space would be a game-changer, but that’s completely beyond our reach,” she said.
And Catherine is not alone.
Website builder GoDaddy’s annual Venture Forward study found that only a fifth of micro-business owners think the government is doing enough.
More than three quarters also described the cost of living crisis as the biggest challenge they had ever faced, with the price of energy being the main concern.
According to Andrew Gradon, UK Director of GoDaddy, micro-enterprises make up 96% of all private sector businesses in the country.
“They are the lifeblood of business in the UK and they are the ones on the front line feeling the direct impact of the cost of living crisis,” he said.
“About 42% said they wanted support with tax incentives, but were also considering business support more broadly – so technical assistance for business development as well as digital strategy support.”
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The study estimates that if the 12% of micro-enterprises at risk went bankrupt, it would eliminate £12 billion from the economy.
The data also shows that the cost of living crisis is having a disproportionate impact on micro businesses owned by underrepresented entrepreneurs.
A total of 85% of black entrepreneurs described it as the worst time they can remember, as did 84% of those who are Asian versus 75% of white entrepreneurs.
A government spokesperson told Sky News: “We recognize businesses are struggling with energy bills, which is why the government is providing businesses with billions of pounds of support.
“This support means some will pay about half of projected wholesale energy costs this winter. We have pledged additional energy support from April.”