Optimism in Highland business takes a big hit
Optimism amongst Highlands & Islands businesses increased as the year went on, but it has now taken a big hit thanks to Omicron. So finds the last in a series of five business surveys conducted by the Federation of Small Businesses in 2021.
Clearly, the impact of Omicron is growing rapidly and causing considerable pain and concern to numerous customer-facing businesses and their suppliers, but the survey also highlights staff shortages and utility and other cost increases as two of the greatest threats to business viability.
Moreover, these threats are squeezing margins and stimulating enforced price rises, and whether or not local and visitor markets can take these increases remains to be seen.
The FSB’s Highlands & Islands development manager, David Richardson, said: “Our latest survey closed on December 14 and, perhaps understandably, it found that businesses are the most positive they’ve been all year about how trading has gone in 2021, with around three quarters (76%) saying that they have done OK or better. Conversely, 8% were really struggling/barely staying afloat.
“The Omicron variant started to flex its muscles during the survey period, and the rapidly deteriorating situation as the virus spreads, together with reimposed covid measures and calls for the public to exercise extreme caution, are taking their toll on trading. No wonder just over a half (53%) of Highlands & Islands businesses said that the potential for future lockdowns or tightening of restrictions was a major fear, and almost a third (31%) were pessimistic about their futures. One wonders what impact the news since the survey closed would have had on these percentages.”
The FSB’s latest survey, which covered all types of business, also looked at staffing, costs and prices charged.
It found that 47% of employers didn’t have enough staff to meet their needs, and, given relatively small sample sizes, that the situation was appreciably worse in sparsely populated areas.
And while just over a third (36%) of short-staffed Highland businesses had struggled on as best they could, the rest had to cut services, opening hours or both.
Increasing costs have also taken their toll on 85% of Highlands & Islands businesses, with four in 10 saying that their profit margins have shrunk but they are struggling on, a quarter that they are reducing their ability to invest in or expand their businesses, and almost two in five that rising costs are impacting on their businesses’ survival chances.
As a result, almost a half of businesses have increased prices this year, and a quarter plan to do so in 2022.
To date, just over two in 10 have increased prices by less than 5%, but seven in 10 have increased them by between five and 20 per cent.
Mr Richardson added: “Whether the market – both locals and visitors – can take price increases remains to be seen, but, worryingly, some businesses say that they are reacting to these trials and tribulations by reducing hours and services (57%) or downsizing (16%). More positively, 14% are automating so that they can reduce their dependency on staff.”
The survey covered businesses in Shetland, Orkney, Western Isles, Highlands, Moray, Argyll and Arran. It took place between December 2 and 14, generating 204 responses.
