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The SME Insights Report , published by small business insurance provider , Simply Business , also found that 48 % of SME owners believe the rising cost of living is the most glaring challenge facing their business . Over half ( 63 %) say that rising taxes , interest rates and inflation are eating into profit margins , with many also grappling with trying to claw back thousands of pounds in unpaid bills .

Over half ( 52 %) of SMEs anticipate a decrease in profits by up to 20 % in 2023 , with customer retention ( 26 %) and lack of funding ( 25 %) cited as factors affecting business . It comes as the Bank of England drives up interest rates to the highest level since the 2008 financial crisis , making access to financing near impossible for many small firms .

Further questions remain about the long-term effects of the increased cost of energy . Over a quarter ( 26 %) of SMEs are now spending up to 40 % more on energy each month compared to the previous year , with some reporting an astonishing 150 % increase in their monthly energy expenses .

To combat unfavourable financial conditions , SMEs are employing various resilience measures . Over a quarter ( 27 %) are resorting to using personal savings to prop up their business , nearly a third ( 29 %) of businesses are seeking bank loans and 23 % are seeking a loan from family and friends to support their operations . �