Highlands and Islands must remain competitive in 2022

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Standfirst

A new survey by the Highlands and Islands Federation of Small Businesses (FSB) has identified the problems and pitfalls affecting small businesses across the region, including those on Arran.

It is the last of five surveys carried out by the FBS in 2021 and the only one that looks at the state of play for small businesses in general across the wider region since Omicron began. Here development manager David Richardson outlines the main findings.


Main story

If there’s one thing we’ve learnt for certain over the past two years it’s that in a pandemic, nothing is certain. Punch-drunk businesses have already closed and opened twice, some receiving generous survival grant support, others nothing, and we have a business community and general public often unsure about what is expected of them next. Life has been extremely tough.

Fortunately, we know a lot about the issues facing small, independent firms and how they’ve changed through time thanks to the five local business surveys that FSB Scotland has conducted this year. The most recent, which covered the Highlands, islands, Moray, Argyll and Arran, closed in mid-December and found that smaller firms were surprisingly positive about the past year, around three quarters doing okay or better.

Then again, one in 10 has really struggled and now Omicron is wreaking havoc and confidence is falling. Three in ten businesses are pessimistic about their futures and, not unnaturally, more than a half are really worried about the potential for future lockdowns or the tightening of restrictions.


Omicron is taking a considerable toll on all our lives, not least on those of many in our small, independent business community, and we must all pray its impact is short-lived and that we’ve seen the end of any dangerous new Covid variants. But the reality is Covid is not going to disappear any time soon and Covid is by no means the only threat to our business community.

Around a half of Highlands and Islands employers lack the staff needed to meet their needs and there’s no sign of things improving in 2022. While around a third struggled on as best they could this year, the rest were forced to cut services, opening hours or both. Inevitably, this impacts on service standards and perceived value for money.

Moreover, around 85 per cent of firms have seen their costs shoot up dramatically thanks to wage rises and rapidly increasing utility and other bills and while four in ten have struggled on as best they can despite shrinking profit margins, a quarter have had their abilities to invest in or expand their businesses reduced and almost two in ten believe rising costs are impacting on their survival chances.

So we have all the uncertainty of the Covid pandemic, we have a serious staff shortage, particularly for tourism and hospitality businesses, and we have rapidly rising costs and other inflationary pressures. With all this being heaped on the shoulders of businesses that want to pay fair and competitive wages and that want to give first class service, something has to give and beleaguered firms are reacting to these trials and tribulations in a number of ways, including reducing hours and services and downsizing. A total of 14 per cent are automating in a bid to reduce their dependency on staff. However, if there’s no other option, they will have no choice but to reluctantly raise prices. Almost a half have already done so and a quarter could be forced to do so in the months ahead.

We must all fervently hope that wage increases will help businesses attract the staff they need, that business costs will stabilise or decline and that consumer demand from residents and visitors will not shrink in the face of shaky consumer confidence and rising inflation. Above all, the Highlands and Islands must remain competitive in 2022.

 

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