Cost pressures putting massive squeeze on micro and small businesses in the Belfast City Council area according to latest NI Enterprise Barometer findings

Enterprise NI has revealed over half (52%) of the micro and small businesses surveyed in its 2023 NI Enterprise Barometer believe cost pressures are impacting the future sustainability of their business.

For the first time, the survey findings now offer a breakdown of results for each Council area.  Among those findings for the 2023 NI Enterprise Barometer for the Belfast City area, are:

55% of responses in Belfast said the cost of doing business was affecting their sustainability.

61% of responses said cashflow is currently stable or strong.

43% of responses said turnover has increased.

52% said there are prospects of growth in the future.

11% of responses said debt was unmanageable.

 

The full list of findings for each council area can be found online at www.enterpriseni.com.

 

Speaking about the results for the Belfast area, Seamus O’Prey, CEO of The Ortus Group, said:

“This year’s NI Enterprise Barometer findings show the stark reality of how businesses are faring in the Belfast City Council area.  In its fifth year, the findings provide an invaluable rich data set, the evaluation of which, will help steer and shape future policy and tailored supports for our small, micro, and self-employed business owners.  We are delighted to see this year’s comprehensive findings disseminated on both an NI-wide and Council specific basis – together we must work collaboratively with Councils and key enterprise stakeholders to ensure we deliver the right support at the right time for our entrepreneurs”.

This year’s Barometer, saw 850 micro, small, and self-employed businesses, across all sectors in Northern Ireland, complete the survey in September and October of this year. Now in its fifth year, the longitudinal survey, supported by the British Business Bank, is the only one of its kind for small and micro businesses in Northern Ireland.

 

Overall the survey found one in five businesses that took part are currently contracting, with one in ten saying they are in difficulty or at risk of closure. The major survey also reveals that 38% of businesses have seen no change in profitability, while 26% have seen their profitability decrease. Of the 850 businesses that responded to the survey, 27% are based in cities, with the rest based in towns (44%), rural areas (20%), and villages (9%).

Cost of doing business carves profit out of potential growth
While 43% of respondents have seen turnover increase, and there is growing optimism about future growth with 54% of businesses expecting their top line to grow, this year’s Barometer shows the cost of doing business is an increasing worry for many companies.

In the next 12 months, 86% of businesses stated they are concerned about increased energy costs, and 88% said they are concerned about the increased costs of goods and services.

30% of respondents stated their cashflow position is weak, and a further one in twenty businesses stated their cashflow position is critical.

63% of respondents increased wages over the last 12 months, with 9% seeing average wages reduced, and 29% seeing no change in average wages.

People and Skills
With NI’s employment rates nearing record levels, there are growing concerns around filling vacancies. Of businesses that responded, one in three have job vacancies and 76% can’t fill these roles. This year’s Enterprise Barometer also points to increasing productivity-related skills and development gaps that threaten the competitiveness of many NI businesses.

Transition out of the EU
The Barometer’s findings also suggest Northern Ireland’s micro and small businesses haven’t fully returned to their Pre-COVID/EU Exit performance levels. In 2019, 52% of local micro and small businesses said they were growing over the previous year. In 2023, that figure now stands at 44%, up from 29% in 2022.

When asked about the impact of the UK’s transition out of the EU on their businesses, 49% of respondents said they see NI’s dual market access to GB and EU markets as a business opportunity, while 24% do not. A further 27% said they do not know what dual market access means for their business.

The number of businesses reporting some challenges with the movement of goods from GB to NI dropped from 85% in 2022 to 71% in 2023. 56% of businesses stated they have had some challenges with the movement of goods from the EU (non-ROI) to NI, while 44% have had challenges with access to non-UK workers.

Need to support more, and better, exporters

With regards to exports, the survey findings showed steady growth in the number of NI small, micro, and self-employed businesses exporting. There is a growing appetite to trade outside of NI, with 45% hoping to expand sales into the Republic of Ireland in the next twelve months (39% into GB, 18% rest of the EU, and 17% other international markets).

Enterprise NI, CEO
Speaking about the Barometer’s findings, Michael McQuillan, CEO of Enterprise NI, said: “The fact that 52% of the micro and small businesses who took part in the 2023 NI Enterprise Barometer believe cost pressures are impacting the future sustainability of their business is extremely worrying. This concern is compounded when we see that only 36% of respondents to the Barometer reported an increase in their profitability in the last year and that 20% are seeing their business contract, with a further 10% saying they are in difficulty or at risk of closure.

“Small and micro businesses are the backbone of the Northern Ireland economy and that is highlighted by the fact that 73% of our respondents are now operating outside of our main cities in Northern Ireland.

“They are at the heart of our communities here, and while the survey has shown more owners have a positive view, with increased confidence and ambition for growth, sadly the reality for many is they will continue to be challenged in profitability because of the cost of doing business and lack of access to appropriate finance and support. We cannot let that happen.

“With 77% of respondents to the survey having sought some form of business advice or support in the last twelve months, we can see there is a very real need out there for further specific assistance for these businesses. There is also a massive, untapped opportunity, to grow local businesses outside of NI and this cannot be ignored. The top learning and support ask from businesses across all sectors is in Sales/Exporting/Business Development and this fundamental support gap must be addressed.

“I am delighted Enterprise NI, and our vibrant network of 27 Local Enterprise Agencies across Northern Ireland, are delivering all of the pre-start, start-up, and early-stage strands of the new Go Succeed programme, and that we are the main delivery force in the growth and scaling strands, but the very clear picture from this year’s Barometer findings is that our micro and small businesses need more bespoke support that is easy to access.

“Northern Ireland urgently needs its first dedicated Entrepreneurship Strategy, and as the NI Enterprise Barometer is the biggest deep dive into small and micro businesses and self-employment in Northern Ireland, it is vital its findings are used to shape this. The rich seam of data we now have can help inform the types of policy and equitable support that will address the specific business needs of micro and small businesses, and ensure we are in a position to achieve our vision of a 10x economy by building a strong and flourishing culture of entrepreneurship right across Northern Ireland.”

Maureen O’Reilly, Barometer Economist, added: “Amidst the emergence of some business confidence in headline growth for the forthcoming year, there are some striking concerns. The escalating costs of doing business threaten to undermine profitability and cost competitiveness, which could frustrate the strategic growth plans of numerous enterprises and threaten the survival of others.

“The survey also underscores a critical issue that must be addressed if we are to build any sustainable growth back into our economy and that is businesses own assessment of the alarming gaps in productivity-related skills and development. Failure to bridge these gaps poses a substantial threat to the competitiveness of countless businesses, potentially hampering their ability to thrive in an increasingly demanding market landscape.”

Commenting on the results, Scott Wylie, co-founder of Sevenvideo.io, a technology company now based in LEDCOM’s Work Cube space in Ballyclare, spoke about his experience in accessing support for his micro-business. He said: “From the outset, Enterprise NI and LEDCOM knew the type of support we needed and what would make a real difference to us. As well as the fixed-price all-inclusive office space, they knew the challenges we would face as a micro business wanting to market our services globally, and through empathetic mentoring and informed signposting have really helped us. Today, we’re based in Ballyclare but we work with clients everywhere from Boston to California and Canada. We hear a lot about the government support given to large multi-national companies to locate here, but the Barometer’s findings are crucial in ensuring smaller business owners are given the specialised support we need to be able to succeed.”

This year also saw Enterprise NI team up with the National Enterprise Network across Scotland, England, and Wales for the first time to capture data from similar firms in those regions about access to finance. Comparative data is currently being analysed and will be released in 2024.

To view the findings of the 2023 Enterprise NI Barometer, visit www.enterpriseni.com