Help for small businesses through cost of living crisis

This week we hear from Chris Curtis, a member of the NatWest South West Board and a senior director of business banking in the region, about the challenges for SMEs in the region.

What are SMEs experiencing?

We wanted to know what Chris was seeing from his customers on the ground across the South West.

“We are seeing around 70% of customers particularly concerned about goods and service prices, as well as energy prices. On the positive side, people aren’t burying their heads in the sand.

“Negative cash flow impacts directly from those rising energy bills, while significantly higher fuel costs and supply chain disruption all contribute to cost increases. We had seen a reluctance to pass on those costs due to concern that they would lose market share, but now we’re seeing that go up because businesses can’t absorb it all. I’m also seeing SMEs up their wages for staff to support them despite the impact on profitability.

“I have a personal early barometer of the economy - where businesses expand or contract based on people’s level of discretionary spend, such as in the leisure sector. I look at how they’re performing and what they’re saying. Currently it’s a perfect storm: rising input cost, increasing inflation, energy and staffing issues.”

What can SMEs do?

When asked about his top tip for SMEs starting to worry about the rising cost of living, Chris urged business owners to reach out to their banking relationship manager as early as possible.

“Don’t leave it 'til it’s at crisis point, engage with your bank as soon as possible. Support is there. My key message is early intervention and early engagement with your bank.

"We really want to help businesses get through this difficult time and come out the other side - we don’t want to see any business fail but grow stronger. There’s lot’s we do every day but the reason my team get up in the morning is because they are really passionate about helping their customers.

“Those that weather the storm are those that understand the whole breadth and depth of their business. They've got KPIs, not just financial KPIs, but also a well-trained workforce, very good relationships within that to support the workforce and then they get loyalty back.

"They understand finical wellbeing in their employees' world and also the business owners take advice from their support network. To be insular and only focused on your business makes it very difficult but there’s so much support out there.

"Resilience is a really key word, and at the end of the day it comes from a robust business plan that’s regularly reviewed, acted upon and tweaked and changed, underpinned by knowing the customer, market and economy.”

Chris is a big fan of a holistic financial health check where SMEs go over every aspect of their business with a trained relationship manager to identify risks, opportunities, and potential pain points. It’s a practical way to assess the health of your business and priorities.

“I’m a big proponent of the financial health check to get a big picture of the business. The customer leaves our meeting knowing the most important four or five things they’d want to do, like to do and need to do.

"There are so many ways we can help: our guidance, mentors, tools like Carbon Planner, specialist sector advice, and business debit cards to spread cost. There are other professionals we can signpost you to, so collectively we can help you navigate choppy waters.”

What does the future hold for SMEs?

Trying to predict upcoming trends is something a lot of business owners will be doing.

Chris said: “I personally think we’re in for a choppy ride, interest rates aren’t going to return to historically low levels and we’re seeing a return to normality in the base rate. However, UK SMEs are innovative and resilient and we’ll come through this. I was amazed in Covid how businesses diversified to keep trading – the success stories that came out of it were incredible.”

The recently published NatWest Springboard to Sustainability Report found that with the right support SMEs could contribute up to 50% of UK 2030 emission targets through pursuing decarbonisation, and the UK economy could see a potential £175billion revenue opportunity by 2030. Chris said these were important findings for SMEs to capitalise upon.

“We’re helping SMEs reduce their carbon footprint with our Carbon Planner Tool and identify any financial savings that have a positive environmental impact. In recent years I’ve seen that work particularly well for manufacturing and agricultural businesses, like with funding solar PV.

"We’re at a real tipping point now; customers want to go green but need the infrastructure and cost effectiveness. Crucially though, going green can generate new revenue opportunities for businesses and more of their customers are expecting these steps to have been taken.”