Income levels and overheads will continue to plague small shops in 2019, a new report has revealed.
Axe Insurance, which published the research, suggests that hope is on the horizon, however, with interest in empty shop spaces growing.
According to the study, just 11 per cent of small shops expect to hire staff in 2019, a fall of four per cent compared to the same period last year. Likewise, investment planning is down by half, with just 15 per cent of small shop owners reporting interest in investing in their business in 2019 – down from 28 per cent in 2014.
Despite an overall lack of confidence, around two-thirds of business owners believe their shops will “survive in the long term”. This is compared to the 26 per cent of entrepreneurs who are “uncertain about their future beyond the next two years”, and the 13 per cent who believe their shops are “likely to close” in 2019.
Those that are considering the closure of their shops say “stress” is a major contributory factor. The research shows that the average small shop owner works longer hours than those in a full-time job, while taking less time out and earning a similar or lower income.
In fact, recent figures show that small shop owners take home the lowest rate of hourly pay of all self-employed sectors, earning just £13.70 per hour on average. This is compared to £29 for small business owners in the construction sector and £27 in the professional services.
The report has been published shortly after the Chancellor’s announcement that business rates would be slashed to boost the profitability for a quarter of all small shops. With the average business rates bill now standing at £7,065 (0-9 employees), the Government hopes the move will see a resurgence in high street stores.
Commenting on the report, Gareth Howell, Executive Managing Director, AXA Insurance, said: “We are seeing a change in how people start retail businesses.
“Entrepreneurs entering the high street are not creating the business around selling a product, but often plan a dual-purpose space for their customers. It’s changed the way we quote to these businesses now, as we realise they defy traditional categorisation,” he said.
“While taking comfort from these imaginative answers to the problems faced by the traditional high street, we do see the real signs of struggle for survival among established businesses. Reductions in business rates are significant and noted by shop-keepers, but other overheads continue to rise, and amidst wider economic uncertainty, are restraining growth plans.”