Supply chain disruption (36%), higher transport costs (27%) and shipping delays (26%) have been the top factors impacting small businesses within the manufacturing sector over he past year, according to a new report.  

The Staffing and supply report carried out by card payments specialist takepayments limited, surveyed SME business owners across the UK to uncover how the current staff shortages and supply chain crisis is affecting small businesses.

Survey findings reveal almost three quarters (71%) of small businesses within the manufacturing sector have experienced supply chain issues, while more than half (53%) have experienced staff shortages. The combination of the supply chain issues and staff shortages has financially impacted six in ten (61%) small businesses within the sector.

Over a third (37%) of manufacturing SME owners described the negative financial impact the supply chain problems are causing on their business as significant and seven in ten (70%) state they expect the staff shortages and supply chain issues to get worse before they get better.

As for the festive period, more than one in four (27%) expect the supply chain and staff shortages to cause major disruption to their customers and one in three (31%) expect the issues to cause moderate disruption.

How are businesses adapting? 

Business owners within the manufacturing sector are adapting their business in response to the ongoing supply chain and staff shortages issues in a bid to continue trading as well as they can.

In response to the supply chain issues, three in ten (28%) business owners said they have already reduced the volume of stock they produce and one in four (26%) have had to change or delay their businesses growth plans.

Over the course of the next 3 months, over a third (34%) of businesses owners said they plan to reduce their businesses trading hours and over a third (34%) said they plan to limit or change the services which they provide.

Business adaptations in response to the ongoing supply chain issues 

Business adaption in response to the supply chain issues  Percent that have already introduced adaption into their business Percent that plan to introduce adaption into their business within the next 3 months  Percent that plan to introduce adaption into their business within the next 2-3 months 
Reduced operation hours  17% 34% 11%
Reduced production volume/outputs  28% 21% 21%
Limited or changed services  20% 34% 16%
Raised prices for consumers  21% 30% 21%
Changed of delayed growth/expansion plans  26% 34% 11%

 

Business adaption in response to the supply chain issues 

Customers are facing the brunt of the supply chain issues, as one fifth (21%) of business owners state they have already raised prices for consumers. Three in ten (30%) state they plan to within the next three months and one in five (21%) plan to do so within the next 3-6 months.

Of those that have increased prices in response to the supply chain issues, one in four (26%) have increased their prices by 5-10% and almost one in five (17%) have increased their prices by a staggering 20-30%.

How long will the issues last and what support is needed? 

Over three fifths (63%) of small business owners within the manufacturing sector believe the issues with both the supply chain and staff shortages are set to continue for more than five years.

With that in mind, small business owners within the sector are calling on the government for support as these issues continue.

Over a third (34%) are calling for tax breaks specifically for small businesses to help overcome the financial implications both issues are causing.  This is followed by paid training programmes (30%), specific SME support packages (30%) and emergency visas (26%).

The support UK small business owners think the government should offer over the next 3 months   Percent of business owners calling for the support 
Tax breaks for small businesses  34%
Paid training programmes  30%
Specific SME support packages  30%
Emergency Visas – like what has been done with HGV drivers  26%
Tax breaks for big businesses   26%

 

Sandra Rowley at card payment solutions provider takepayments limited said:” Until the supply and staff shortage issues are overcome, small business owners across the UK could continue to be hit by negative financial implications. Which may ultimately lead to further price increases for consumers.

Small businesses within the manufacturing sector are calling on the government to introduce a tax break to help them financially navigate through this climate. This support would help relieve the financial pressures their businesses are facing, whether it’s increased stock costs due to supply issues or delaying the growth of their business.” packages (30%) and emergency visas (26%).

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