Small businesses across the UK are reporting rising revenue, driven largely by a significant increase in ecommerce activity, according to a new survey by Quickbooks.
The latest QuickBooks Small Business Insights, a quarterly survey of 4,000 small businesses in the US, Canada, the UK and Australia, has identified a new wave of optimism among small firms, with many forecasting continued growth despite ongoing economic challenges.
The main findings for the UK show that:
- 28% of UK small businesses reported an increase in revenue during the three months leading up to July 2024. This marks a notable rise from 15% in January 2024.
- 45% of respondents said that more than half their sales are generated online, up from 41% in April 2023.
- Looking ahead, 31% anticipate further growth in ecommerce over the next three months.
Although 50% of businesses experienced rising operating costs over the past three months, this is the lowest figure reported since the survey began. This decline in cost pressures suggests that more businesses are now able to convert revenue growth into profit.
The findings also suggest that UK small business owners are concerned about the upcoming Autumn Budget, with the prospect of possible changes to dividend tax thresholds, corporation tax relief, employment allowances and other key tax policies.
"Our research suggests an, albeit fragile, confidence in the outlook of small businesses in the UK, with a record number reporting rising revenues, especially from ecommerce, and easing cost pressures. This growing confidence, however, has the potential to be somewhat thwarted with the forthcoming Budget, amid speculation of changes to current allowances, thresholds, tax reliefs and taxes." Pauline Green, head of product compliance & programs at Intuit QuickBooks UK.
Four things small businesses should do before budget day
Pauline Green, head of product compliance & programs at Intuit QuickBooks UK, has this advice for small businesses ahead of budget day:
- If you're looking to take a dividend, pay it now, in this quarter. Don't wait until after the budget in case thresholds change.
- If you have spare cash, re-invest it into the business or other assets. If you pay corporation tax, take advantage of the tax breaks available under R&D and full expensing.
- Get owed cash back into the business. Stick to the invoice terms you set out and if customers aren't adhering to them, you are legally entitled to add interest. If it's a customer that's late paying all the time, set dynamic pricing.
- Review your current tax year dates. Ask your accountant whether there would be any cashflow benefits to changing the timings of your tax year ahead of the budget.
Commenting on the QuickBooks survey findings, David Bharier, head of research at the British Chambers of Commerce (BCC), said: "Business confidence has been gradually ticking up in recent months and it's good to see further evidence from Intuit. Our own data has shown that concern about external factors such as inflation has begun to fall. However, a lack of widespread business investment continues to be a key challenge, and global political uncertainties are still weighing down on the ability of firms to spend. The forthcoming budget will be a critical moment for the government to outline its commitment to economic growth and build business confidence further."
Written by Rachel Miller.