The findings clearly demonstrate the increasing cost pressures businesses are feeling, in contrast to previous Small Business Barometer reports which showed businesses were expecting to swallow the extra costs such as energy.

Overall, 52% of businesses said they planned to put up prices, but firms in the North East are most at risk of price inflation, with 65% saying they planned to raise prices in the second quarter of the year.

Across sectors, general retail (76%), fashion (72%) and food and drink (67%) are the most likely to say they will increase prices.

More than half of those (59%) are raising costs at an average of 10% while a third (32%) are set to raise them by up to 20%.

Emma Jones, CBE, Founder and CEO of small business support platform and business support provider Enterprise Nation, said: “Small businesses have been holding back since energy costs started to bite last year. Now the competing pressures of inflation, energy and staff costs have proved too much, and they have had to make the difficult decision to increase prices.

“Many small businesses told us they felt costs would have stopped rising by now and had hung on as long as they could. 

“Despite all of that, businesses are still supporting their communities. Today more entrepreneurs are being driven by purpose and are giving back through profit share or social enterprises, which is so brilliant to see, especially in these straightened times.”

The Small Business Barometer found more than a third (39%) of businesses said sales had fallen due to the cost-of-living crisis. Again, businesses in the North East were hardest hit, according to the analysis with 56% saying sales had dipped, the highest in the UK.

That had a knock-on effect on growth plans for this year, which were downgraded by 9% point to 30% over the last quarter together with an increase in the number of businesses expecting to stay the same, which increased by 11% to 44%.

Small firms in the Yorkshire and Humber and North East were most likely to say they would were shelving growth plans this year (both 56%).

The Small Business Barometer found that the cost-of-living crisis is now considered the biggest challenge small business owners have ever faced, even when compared to Brexit and the Pandemic, rising by 8% points to 41%.

Giving back

According to the Barometer, more than a third (36%) of businesses are started by people because they want to ‘give back’ to their community. That figure was highest in London, where 44% were purpose-driven entrepreneurs. In the North West, 39% and in the South West 37% said they started up to help the community.

Side hustle

A third of small business owners are also holding down another job. The Barometer found 45% of businesses were started as a side hustle, with that rising to 70% in the South East, the highest in the UK. A third of business owners currently (32%) have a full or part time job. Businesses in the education sector (37%) beauty industry (36%) were most likely to say they had a job as well as running their company. 

Read the full Enterprise Nation Small Business Barometer report here.