Despite the continued fall in inflation over the past year, small business costs have continued to rise faster
Research undertaken by the Forum of Private Business (FPB) shows that during 2014, business costs were rising 3.1% higher than inflation.
The Forum’s latest Cost of Doing Business survey, carried out among its members, shows firms are still feeling the squeeze despite signs that the economic recovery continues to gather momentum. Its results showed that 63% of businesses have seen an overall increase in their business costs. The response also showed that 70% of businesses reported an increase in energy costs, 65% in transport costs, and 76% had seen a rise in marketing costs, and 65% a rise in staff costs.
The report also identified that 38% of small business owners admitted to being unable to pass any rising costs on to customers, forcing them to cut their own costs to keep prices static and just 3% were able to pass on costs in full. 81% of firms indicated that rising business costs have been detrimental to their business, 73% have had cash flow issues as a result and it has had detrimental effect on 51% of firms when looking to invest and 51% also reported that it has been detrimental to employment levels and 63% felt that it had inhibited their plans for growth.
“The major reasons for increases in prices are predominantly down to transport and energy prices rising,” explained Phil Orford, Chief Executive, FPB. “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.”
Caption Phil Orford, Chief Executive, FPB – “The major reasons for increases in prices are predominantly down to transport and energy prices rising…”