More agricultural small businesses predicting contraction than growth in Q4
Tuesday 1st November 2022
Small businesses in agriculture are experiencing one of their most difficult quarters yet, with just one in ten businesses in this sector predicting growth (11%). This figure is a third of the national average (32%) and represents a significant decrease on last quarter (25% vs 11%). Despite a difficult quarter for many businesses, with growth forecasts hitting their lowest in two years, agriculture remains the worst hit amongst all sectors.
Meanwhile, the proportion of small businesses anticipating a period of either modest contraction or struggling to survive rose this quarter to 28% - the highest figure since COVID-restrictions were lifted. This proportion was almost double that of Q3’22, where 16% were anticipating a period of contraction. It is also a significant increase on the figure from 12 months previously (20% in Q4’22).
The Novuna Business Finance study has been tracking small business growth predictions against prevailing market conditions every quarter since 2015. At the start of each quarter Novuna asks a representative sample of 1,200 small business owners about their growth predictions for the next three months. At a time of unprecedented economic strain and market uncertainty, the contraction of growth predictions is a cause of concern, although the scale of the dip in confidence this quarter is less pronounced than may have been expected.
The percentage of UK small businesses predicting growth has hit its lowest level in two years (31%), with the latest figures suggest a slight drop in growth predictions on last quarter (34%) and a bigger fall on this time last year (37%) - a time when the country was still coping with Covid restrictions.
In addition, 18% of small businesses fear they will contract or struggle to survive over the next three months. These figures have gradually risen quarter-on-quarter through 2022 and the percentage of small businesses fearing for the future is now at its highest level since January 2021.
Across the country, the survey findings by industry sector present a far more mixed picture. In some sectors, small business confidence fell sharply since last quarter although, to some extent, this was offset in other sectors by a greater proportion of business leaders seeing uncertainty as an opportunity to secure growth. Compared to last quarter, the percentage of small businesses predicting growth fell these sectors: Transport and distribution (falling from 30% to 24%), real estate (falling from 32% to 27%) and hospitality (31% to 26%). In the manufacturing sector, the percentage of small businesses predicting growth held firm on last quarter (35%) - although this remained significantly down on 12-months ago (48%).
We are all very aware of the seismic economic challenges that everyone is facing as we head into autumn and winter months. We were not surprised to see a dip in the proportion of small businesses that are predicting growth in the run-up to Christmas, although the fall was less severe than may have been expected - given the scale of economic volatility and the impact of price rises and inflation on running costs and the supply chain. Whilst in some regions and sectors there are grounds for concern, our findings also suggest there are strong levels of resilience from other businesses. We saw this during the lockdown era, a time many small businesses where quick to adapt their plans, some even re-purposed or re-engineered their businesses at a time of unforeseen change. For many enterprises, the same may be required this winter - and Novuna Business Finance will be there to support established enterprises that are working on plans to adapt, grow and fulfil their potential despite the enormously challenging context.
Jo Morris
Head of Insight
Novuna Business Finance
Q2'21 | Q3'21 | Q4'21 | Q1'22 | Q2'22 | Q3'22 | Q4'22 | |
Significant expansion | 0% | 4% | 2% | 3% | 4% | 2% | 2% |
Modest organic growth | 22% | 11% | 10% | 20% | 21% | 23% | 9% |
Stay the same/ no change | 66% | 75% | 66% | 66% | 55% | 59% | 58% |
Contract/ scale down | 11% | 4% | 14% | 6% | 10% | 13% | 18% |
Struggle to survive | 2% | 4% | 6% | 6% | 7% | 4% | 11% |
Don't know | - | 2% | 2% | 0% | 3% | 0% | 2% |
Net growth | 22% | 15% | 12% | 23% | 24% | 25% | 11% |
Net decline | 12% | 7% | 20% | 12% | 17% | 16% | 28% |
Percentage of small business owners that predict net growth by sector:
Quarterly findings and comparisons to a year ago
Q4 2022 | Q3 2022 | Q4 2021 | |
Media & marketing | 48% | 36% | 47% |
IT & telecoms | 40% | 44% | 36% |
Finance & accounting | 40% | 44% | 41% |
Manufacturing | 35% | 34% | 48% |
Legal | 33% | 41% | 40% |
Retail | 28% | 20% | 29% |
Construction | 27% | 18% | 26% |
Real estate | 27% | 32% | 24% |
Hospitality & leisure | 26% | 31% | 34% |
Transport & distribution | 24% | 30% | 29% |
Agriculture | 11% | 25% | 12% |
Note to editors
The research was conducted by YouGov among a representative sample of 1,313 small business decision makers on 4 October 2022, spanning all key industry sectors.