Small businesses continue to suffer as a result of rising costs
The figures show that the majority of businesses are continuing to see their costs increase - and energy is one of the major culprits.
According to the latest ‘Cost of Doing Business’ survey from the Forum of Private Business (FPB), small businesses have continued to see increases in the cost of energy throughout 2014, despite the steady fall in inflation over the last year.
The study, conducted across members of the FPB, reported that 63% of small businesses had seen an overall increase in their business costs, with 70% of these businesses noting a particularly steep rise in the price of their gas and electricity.
Of these firms, 81% indicated that these cost increases had been detrimental to their business, having caused cash flow issues, hindered investment opportunities, and inhibited plans for general company growth.
Feeling the strain
Commenting on the findings of the study, FPB Chief Executive Phil Orford highlighted both energy and transport as the main profit-drainers for small businesses so far this year.
While the decision to increase energy prices is out of the control of business owners, it is still possible for small firms to control the rates they’re paying for their gas and electricity.
He said: “The economic outlook continues to improve, but costs still remain an issue for our members - and a key focus of our lobbying and support services.
“This is a timely reminder that despite all the talk of a need for above-inflation wage rises, businesses continue to feel the strain of rising costs. With the auto-enrolment of staff into pension schemes just around the corner, the affordability of significant wage rises coupled with increased pension contributions will be called into doubt.”
Reducing energy costs
Unfortunately, it would appear that the continually rising cost of energy could be playing a significant role in restricting SMEs from taking full advantage of the UK’s apparent economic recovery.
But while the decision to increase energy prices is out of the control of business owners, it is still possible for small firms to control the rates they’re paying for their gas and electricity.
Switching to a better deal with lower unit rates enables businesses to minimise the cost of their energy, and those that have never done so in the past can cut their bills by 30% simply by getting a cheaper contract. And even if firms have switched before, it’s likely there will still be impressive savings to be had when their current deal is up for renewal.
In short, the message is for small business owners to get to grips with their energy contracts, keep an eye on their end dates and take a proactive approach to getting a better deal. Given the savings available, it’s more than worth the effort of a ten minute phone call.
Kim is an Online Content Producer at Make It Cheaper, meaning she is responsible for writing content, creating guides and designing tools that small business owners will find useful. With five years’ experience working with SMEs in the online space, Kim knows how to produce content that reaches and engages with a wide audience.You can email Kim at firstname.lastname@example.org