Marketing and media firms in the UK are more likely to find running a business in the current climate challenging compared to other professional services firms, including law, accountancy, or recruitment businesses.
More than eight in 10 (86%) of marketing firms surveyed by business payments specialist Equals Money said they are finding running their business challenging, compared to 75% across all responding professional services firms.
The biggest cash flow challenges for marketing and media firms are too much debt or borrowing and keeping up with salary expectations, each cited by 43% of those surveyed. In comparison, rising energy prices and rapid expansion were the top concerns across all respondents regardless of professional service activity (22%), highlighting the more focused set of challenges in marketing, according to the research.
The survey of 1,000 business leaders found that nearly all (98%) professional services firms are contending with cash flow challenges, with 86% of those working in media and marketing expressing worries that they may have to pivot, sell or even close their business as a result.
More than half of marketing businesses (57%) report having already pivoted their business model, with 43% currently looking to sell – compared to just 34% of all professional services firms.
Payroll ups the cost for marketing businesses
The single largest area of cost increase for marketing and media businesses over the past two years has been staff payroll and benefits (71%). Across all professional services firms included in the research the biggest rise in cost was due to raw materials.
Current costs are highest in travel and entertainment and tax – each cited by 43% of marketing firms, while 42% are considering changing their pricing strategy.
And a majority of marketing firms (86%) say they have seen a rise in employee expense claims – compared to 57% of all professional services respondents.
Despite the challenges highlighted by survey respondents, seven in 10 marketing and media companies have a positive outlook, though the same proportion (71%) expect demand to decrease.
Almost two-thirds of all professional services businesses reported hikes in revenue and 59% cited profit increases since 2021. When asked about their business priorities, the most common were expanding overseas (27%), improving environmental sustainability (27%), and boosting employee recruitment and retention (26%).
But marketing firms were less likely than other professional services to expect an increase in overall business costs this year, while 71% expect an increase in profits compared to 58% across the survey pool.
Cost of living concerns
Virtually all businesses (98%) expect the cost-of-living crisis to cause problems, with the most common issues being the likelihood of staff leaving in search of higher salaries (36%), lowered customer demand (36%), struggles to meet sales targets (34%), declining employee productivity (31%), and the need to lower prices (29%).
Simon England, managing director at Equals Money, commented: “The survey’s findings reflect the major financial obstacles UK businesses have faced – and continue to face – in a world disrupted by seismic macroeconomic events like COVID-19, Brexit, the increased cost-of-living and what looks to be an inevitable recession.
“Our research shows that professional services businesses have maintained a positive, upbeat outlook as they come to terms with this new reality. Nevertheless, they are actually aware of ongoing cost-related challenges and now must take proactive steps to address them. For example, using data-driven methodologies to make better decisions, cutting unnecessary costs, and employing the right money management tools for individual circumstances and needs.”