Recession, rising costs and retention of staff were the three key challenges identified by SMEs for 2023, according to the latest survey from an award-winning HR consultancy.

The third annual SME Survey, from Kettering-based HR Solutions, has revealed that “finances are arguably a higher priority than ever before” with more than half of the companies questioned predicting rising costs will be an issue in the year ahead and 70% stating that that available finance would have the biggest impact on decision making, closely followed by profitability and inflation.

A total of 46% of participants admitted managing and controlling costs is a major financial challenge for 2023 and to effectively manage costs, 38% of SMEs have highlighted that maintaining a sufficient cash flow will continue to be vital throughout the year.

The fieldwork took place at the end of 2022 and all the companies surveyed had fewer than 250 employees. The respondents spanned multiple industries, including manufacturing, education, care, hospitality, finance, energy, insurance, property, and pharmaceuticals.

HR Solutions first launched the SME Survey in 2021, during the pandemic and priorities have changed dramatically since then. In the first and second SME Survey reports, Covid19 had a huge impact on the findings. However, this year not one SME mentioned the virus.

Business financial performance and securing new business have consistently been selected as key challenges throughout each of the three surveys, and, unsurprisingly, 46% of survey respondents selected a potential recession as one of the main challenges in 2023.

HR Solutions CEO Greg Guilford said: “Each year, our SME Survey provides a pulse check on the SME landscape. We look at how the previous year has impacted businesses, and we use our results to predict key factors for the year ahead, sharing insight on how to leverage opportunities, and overcome challenges.

“This is our third SME Business Survey and offers us the chance to evaluate how trends have changed over the past few years. The UK now finds itself on the verge of a recession which is highly likely to have impacted the survey data for 2023 and swayed the statistics heavily towards a financial focus. Finances are arguably at a higher priority than ever before.

“Recruitment and employee retention also remain key priorities for SMEs as they continue to focus on their people, as they did in 2022. The importance of mental health at work has increased by six per cent when compared to the 2022 SME Business Survey results. Business owners must continue to see this as a high priority, particularly with external factors including the cost-of-living crisis, which are likely to have an impact on employee wellbeing throughout the year.”

In the report, HR Solutions address the issues raised and suggest recommendations for SME business owners to overcome the challenges. The forward-thinking firm have created a dedicated hub of resources, templates and guides as well as a 10-point plan to help companies manage effectively in a recession.

The plan, which can be used as a checklist, covers topics including cost cutting, organisational structure and pay.

Greg added: “With 69% of SMEs focusing on increasing turnover this year, forward planning and innovative thinking will be crucial for SMEs to succeed.”

To read the report in full visit https://www.hrsolutions-uk.com/business-support/sme-business-survey-2022-23/