The report also found that more than a quarter of businesses are fearful of customers spending less this Christmas and while some are absorbing costs, others are being forced to increase prices and make redundancies.
In the bimonthly survey of 500 medium-sized businesses’ leaders, half (49 per cent) said rising supply chain costs ranked top of their list of concerns between now and Christmas. Supply chain disruption is also one of the biggest challenges facing one in three businesses (33 per cent), while just 16 per cent were most concerned about energy bills specifically.
Over a quarter of firms (27 per cent) fear customers spending less in the run-up to Christmas due to the cost-of-living crisis. This rises to almost a third (30 per cent) in the leisure and hospitality sector, as firms worry about the impact on trading at a time of year that is traditionally one of their busiest.
To try and combat the triple threat of rising costs, supply chain disruption, and concern over reduced consumer spending, businesses are taking action.
While nearly one-fifth (17 per cent) are absorbing rising costs to keep end prices the same, a greater portion (20 per cent) are raising the price of goods and services. Nearly one in five (17 per cent) will have to make redundancies.
Nearly one-fifth (18 per cent) are taking on new debt or extending current overdraft facilities, despite soaring interest rates and borrowing costs being a top concern for 30 per cent of firms.
However, despite the challenges, businesses still expect to enter 2023 in a better position than at this time last year. Nearly three-quarters (72 per cent) said they are ahead of their forecasted performance for 2022, despite multiple economic headwinds driving downward pressure on performance.
Meanwhile, nearly two-thirds (60 per cent) are seeking new funding earlier than planned as they turn their focus to innovation and growth, with one in five (20 per cent) are seeking funding ahead of schedule to support new product or service development.
Meanwhile, businesses are calling on the government to help ensure their success next year. Support schemes designed to manage supply chain issues are the policy intervention that nearly a quarter (23 per cent) most want to see. Further targeted support for energy bills (19 per cent) is also front of mind for business leaders.
Ed Dwan, partner at BDO LLP, said while rising energy bills have dominated the political and news agendas, it’s clear that supply chain issues and rising costs in the round are causing serious headaches for the UK’s mid-sized businesses.
“These firms are the engine of our economy and they need the Government to provide a helping hand to ensure they are in the best position to be able to grow in 2023 against the challenging backdrop,” he said.
