The harsh realities and concerns of small businesses has been laid bare in a new report which reveals 87% believe inflationary pressures will impede their growth.

The report also reveals 64% of SMEs (small and medium-sized enterprises) fear rising energy costs will slow down expansion plans, while just 4% say Brexit has had a positive impact.

Worryingly, it also discovered 62% are focused on surviving or sustaining their business - compared to just 33% looking to grow over the next six months.

The findings come a survey of 335 owner-managed firms by accountants and business advisors Kreston Reeves, which has offices in Canterbury, Medway and Sandwich, and the Association of Practising Accountants (APA).

However, despite the concerns, 81% say they are in better shape for the future now than before the pandemic, while 82% felt confident they would be able to access the finance they needed over the next six months.

Andrew Griggs, senior partner at Kreston Reeves, said: “The uncertainty following the Covid pandemic, the UK’s new relationship with its largest trading partner and now conflict in Ukraine, together with pent-up consumer demand, rising inflation and energy prices, will continue to create challenging economic and trading conditions for many months if not years to come.

“Now is the time for businesses to rethink and look towards building a business for the next decade. That will mean addressing immediate challenges and, in the longer term, recalibrating business models. A ‘whole business’ view and an investment mindset is needed to build tomorrow’s business.”

Martin Muirhead, APA chairman, added: “Many of these businesses have done well to survive the last two years. Having looked forward to a period of economic stability post-Covid they are confronted with the opposite. It is imperative the government take a more realistic view of our future trading relations with Europe recognising that labour shortages coupled with an altogether more challenging export environment pose a real threat to recovery.

“Policymakers also need to recognise that uncertainty remains across many sectors of the economy and that businesses want reassurance as well as clear and unambiguous advice and support. Adopting a flexible approach to business policy which recognises the many challenges facing owner-managers will be key to a sustainable recovery.”