Small shop owners are facing an uncertain time in 2019, with income down, overheads up and growth plans largely on hold.
Just 11% of small shops expect to hire staff in 2019 (a fall of four percentage points on last year), and investment planning is down by half, as just 15% will invest in growing their business in 2019 (down from 28% in 2014), according to research by Axa Insurance.
While approximately 66% of shop owners said they expect their business will survive in the long term 26 per cent of shop owners are uncertain about their future beyond the next two years and 13% of small shops are ‘likely’ to close in 2019 according to their owners.
Stress is a key reason for this – for 46% of shop owners the fact that the average hours work exceed those of a full-time worker in the UK, holidays are few and income low contribute to stress levels.
The average hourly rate for take-home pay for small shop-keepers is approximately £13.70 per hour compared with £29 for small business owners in the construction sector, £27 in professional services, £17 in the creative and design industries, and £16 in the personal services sector. £17,828 is the average figure shop owners quote as being the point at which they would consider their shop no longer provides a living wage.
Cuts in business rates are expected to boost profitability for a quarter of small shops. However, while rates were cut in the October budget, the average business rates bill is now £7,065 per year for a single shop (0-9 employees), these savings may be eaten up by rising overheads for many as seven out of ten report shop owners report significant rises in the cost of running their premises alone, in terms of rent and utility bills.
When it comes to what prompts people to set up business and how: Axa says 7% of entrepreneurs said empty retail space in their locality had promoted their business idea with locations being: Greater London, Brighton, Birmingham and Norwich and less so, the North of England, Scotland and Wales.
There is also a trend for dual-purpose retail space such as:
- Rural moped hire and café;
- Urban mushroom farm and restaurant;
- Beanbag bookstore and café;
- Wine shop and events venue;
- Caribbean and Polish food store;
- Go-karting café and shop based around a local team;
- Gaming shop with role-playing venue.
Gareth Howell, executive managing director at AXA Insurance, said: “We are seeing a change in how people start retail businesses. Entrepreneurs entering the high street are not creating the business around selling a product, but often plan a dual-purpose space for their customers. It’s changed the way we quote to these businesses now, as we realise they defy traditional categorisation. While taking comfort from these imaginative answers to the problems faced by the traditional high street, we do see the real signs of struggle for survival among established businesses. Reductions in business rates are significant and noted by shop-keepers, but other overheads continue to rise, and amidst wider economic uncertainty, are restraining growth plans.”