‘Worn out and in debt’: UK small business owners struggle amid cost of living crisis

When chef Harriet Mansell started a business, she didn’t imagine she would end up with £30,000 (€34,791) of credit card debt and struggling amid a cost of living crisis.

She had pulled together her savings from a decade of work in London’s high-profile kitchens and on international super yachts to open her first restaurant in 2020.

Her vision was to create a community-spirited workspace in the coastal seaside town of Lyme Regis, southwest England, where people would buy and support local produce.

Just as COVID-19 restrictions were eased and her business was gaining impetus, an increase in the cost of living coupled with an imminent 80 per cent hike in energy prices has rattled the survival of her Michelin-featured restaurants.

Online booking numbers have decreased but customers wouldn’t come if she increased prices, Mansell says.

“It’s ridiculous,” she said, adding that the lack of an energy price cap will break her business model.

“In hospitality, margins are slim. When the VAT increased and everything went up in price, it became increasingly difficult.”

She hasn’t been able to pay her taxes each month because she is trying to pay her staff.

It’s a problem across the United Kingdom with several charities warning that the cost of living crisis will only get worse.

An increase in people struggling to pay their bills

Inflation hit a 40-year high of 10.1% in the UK in July 2022, mostly due to rising food and energy prices.

Dame Clare Moriarty, chief executive of the organisation Citizens Advice, has warned that without more support from the government, “the soundtrack to winter will be the beeping of emergency prepayment meter credit running out and the click of lights and appliances being turned off”.

“We need a plan, not platitudes. Government support has to match the scale of this crisis, there must be a financial lifeline for those who need it most,” Moriarty said.

The UK government has said that every household will be entitled to an energy discount of £400 (€464) in six instalments, starting in October 2022 as consumers face an 80% rise in energy bills.

But analysis from Citizen Advice shows that even with current government help, one in five people in the UK will struggle to pay their energy bills in October based on the projected price cap rise.

The charity added that this could jump to more than one in three people in January when prices are predicted to soar even higher.

The End Fuel Poverty Coalition charity has estimated that from 1 October, 21 million people will face fuel poverty, a number that could rise to 28 million people from January 2023 if the government doesn’t take action.

‘I’m worn out’

In Somerset, Claudia Adrianna, founder of a vintage Hollywood-style fashion boutique called Deadly is the Female, said there is no end in sight to the rising costs.

Since her business launched at the tail end of the 2008 recession, it has weathered several difficulties but she has seen nothing like this.

As a single parent to a six-year-old son, Adrianna said she doesn’t have the time to shop around for cost-effective deals either. Despite budgeting a year in advance to stay on top of her bills, she said the money quickly disappears.

“Convenience is something that I have to pay for to raise my son on my own,” Adrianna said, adding that she has to make decisions about what she can afford.

After putting her son to bed, she works into the wee hours of the morning, shipping her products internationally.

“I’m worn out, I’m exhausted and then I have to face another financial struggle after the last few years of uncertainty. It is overwhelming,” she said.

There is no support from the government, said Adrianna, adding that you are expected to get on with it. “It is always about trying to find new ways to be motivated.”

But Adrianna says that asking people to buy a pretty dress feels awkward when they have to choose between switching their heating on and buying food.

Her daily outgoings have increased and online traffic has fallen but she hasn’t increased her prices.

“Whenever there is a big flare-up in the news, spending drops,” she added

“I can’t imagine the government doing anything but any kind of help will be welcome. I just feel really disillusioned by the whole thing.”

‘Baptism of fire’

Mansell, the chef in Lyme Regis, has meanwhile written to the West Dorset MP Chris Loder for advice and support.

Loder told a local newspaper The Bridport and Lyme Regis News that his priority is helping local people and businesses rather than those in the ‘high-end’ category.

Mansell says they “are not a high-end business, we are peasants”.

With her cash reserves depleted during the pandemic, no family income, and as an independent business without government support, she said there is no safety net.

“It has been a baptism of fire,” says Mansell who started the restaurant Robin Wylde in late 2020. In the summer of 2021, she opened a food and wine bar Lilac in a 400-year-old cellar.

For Mansell, there is time for little else with every minute spent reinventing, adapting and evolving the business to get through the winter months.

Mansell lives in temporary accommodation and has struggled to find a home to rent locally where she works.

Prices in the area have skyrocketed, she says, and housing is taken up quickly. Her transport costs have doubled and she can’t vote locally.

But she remains deeply invested in her community and will do anything to keep the business alive. For her, laying off staff is not an option.

“I have to adapt quickly and come up with lots of ways to generate interest. If I don’t have my staff there is no business.”