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What next for our businesses in time of pandemic?


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IF THERE'S one thing that we've learned for certain over the past two years it's that in a pandemic, nothing is certain, says David Richardson, Highlands and Islands development manager for the Federation of Small Businesses (FSB).

Following the publication of the FSB's survey last week showing that fragile business optimism had taken a big hit since the emergence of the Omicron variant, Mr Richardson looks here at the toll Covid-19 has taken on firms and the key challenges they face in the months ahead.

"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.

"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, Shetland, Orkney, Outer Hebrides, Moray, Argyll and Arran, closed in mid-December and found that smaller firms were surprisingly positive about the past year, around three-quarters doing OK or better.

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

David Richardson, regional development manager for the Federation of Small Businesses.
David Richardson, regional development manager for the Federation of Small Businesses.

"Omicron is taking a considerable toll on all our lives, and we must all pray that its impact is short-lived and that we've seen the end of any dangerous new Covid variants. But the reality is that 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 input bills, and while four in 10 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 10 believe that 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. Fourteen per cent are automating in bids 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 both locals 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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