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Over 1 in 3 mid-sized North West businesses plan to restructure as cost pressures mount

According to new research from leading business and financial adviser Grant Thornton UK LLP, a combination of inflationary pressures, rising interest rates and high energy costs, and ongoing supply chain issues are all significantly impacting the financial viability of many mid-sized businesses.

Grant Thornton’s Business Outlook Tracker*, which surveyed 101 businesses in the North West in October 2022, found that, in the face of these mounting pressures, just under half (48%) of respondents have already restructured their operations, with a further 40% having plans to do so.

Many businesses are having to secure additional finance to work through the escalating costs facing the market, with 48% already having secured further funding and 38% planning to do so. Similarly, 41% of businesses have already reviewed headcount with another 39% planning to.

The strain on funding has also led to a drop in investment expectations across all areas monitored by the Tracker. The most significant drops compared to the last round in August 2022 were seen in technology (-11pp), employee wellbeing (-3pp) and recruitment (-2pp).

But investment looks to be being directed to areas that will have the most impact on reducing costs. Well over three quarters (84%) of respondents have already invested, or are planning to invest, in productivity, efficiency and automation.

Carl Williams, North West Managing Partner for Grant Thornton UK LLP, said:

“Businesses are facing incredible cost pressures from all sides. The combination of input cost price increases, high energy costs and rising interest rates, are seeing businesses faced with increases from 5% to as much as 100% in some cases, when combined with the added strain of ongoing supply chain shortages in some areas. The severity of the environment is clear, with the majority of those surveyed either planning to restructure their operations, or already having done so.

“There isn’t one solution to fix these issues but there are always sensible steps that businesses can take to start to rebuild confidence. For example, reducing the businesses debt level to counter interest rate rises, reducing energy usage and looking for efficiencies in the face of energy cost rises, and considering alterative, cheaper suppliers.

“Many businesses are also reviewing their budgets for the next 6-12 months. It’s vital that these forward plans account for assumptions that may need to be made over this period, such as the impact of the end of energy bill relief, and rising interest costs. Businesses need to be proactive and take action where they can, rather than burying their heads in the sand – its these businesses who will work their way through this challenging environment, and emerge a more resilient, efficient organisation.”

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