Novuna Business Finance, a trading name for Mitsubishi HC Capital UK PLC, has released data indicating that 75% of small business owners are experiencing sleepless nights, with market volatility retaining its position as the top concern for the second year in a row.

The findings shed light on the challenges faced by small businesses, providing insights into their anxieties and the impact of economic factors on their operations.

Market volatility

Market volatility, identified as the primary concern by 35% of respondents in Q1 2024, has seen a slight decrease from its peak in Q1 2022. Despite this, the figure remains approximately double the level recorded eight years ago, indicating the lasting effects of economic uncertainties.

The impact of inflation, persisting at 4% in February, has been profound for small business owners, with 21% expressing concern about interest rates. This marks a notable increase from the 16% reported eight years ago and is consistent with worries observed in the previous year.

The report highlights that 21% of businesses are struggling to manage their cash flow, making it one of the top three issues this year. Concerns about retaining business also remain high, experiencing a slight increase to 22%, up from 21% the previous year.

Sector-specific variations underscore distinct challenges faced by businesses. Construction and real estate businesses reported the highest levels of worry, with 84% and 87% expressing major concerns, the highest since records began in 2015. Hospitality and retail sectors are particularly troubled by market volatility, with 56% and 61% citing it as a key issue.

Brexit’s impact has diminished, with only 12% expressing concern, down from 26% four years ago. However, it remains a significant worry for the retail (30%) and IT (26%) sectors. Concerns about the long-term effects of COVID-19 have significantly decreased, with only 6% grappling with it, a sharp decline from 39% in 2021. In the hospitality and leisure sector, 22% still consider it a major issue.

Regionally, businesses in Yorkshire and the Humber exhibit the highest increase in anxiety, rising from 77% in 2022 to 82% presently. Similarly, businesses in Wales have seen an uptick, increasing from 72% to 78% over the last two years.

Joanna Morris, Head of Insight at Novuna Business Finance, said: “Small business owners might be mildly relieved by the recent stabilisation of inflation rates, but it goes without saying that the long shadow cast by the previously high rates and market turmoil witnessed over the past 18 months has had a monumental effect on their outlook and operations.”