SMEs are struggling to expand due to high operating costs, according to a study by the Federation of Small Business. Over 1000 small to medium sized businesses took part in the survey and a staggering 71% reported that their operating costs were higher than ever, with 74% of SMEs reporting the same six months ago. So, which operating costs are on the rise and how are they affecting business?
Examples of rising costs and demands hindering the growth of SMEs
Over a third of small businesses reported that their utility bills were on the up, that’s 24% more than in 2016. Spending more on utilities means that small businesses have less cash to spend on the growth of the business, such as recruitment, marketing and advertising.
If your small business is struggling with rising utility costs then ensure you are getting the best deal. Use comparison websites for your gas, electricity and water as well as telephone line, internet and other monthly subscriptions you need for your business.
Most business bank accounts charge fees – the type of fees that you are responsible for will depend on which business account you go for. If you aren’t married to your current business bank account and would consider switching to save some money then why not find out how you can save money on your business bank account.
Many businesses have people on the road or need to use transport, in fact, over 28% of small businesses reported that rising fuel costs were becoming an issue.. With increased fuel bills, the transportation cost increases hence the money spent to pay suppliers. Again, this affects the growth of the SMEs as instead of the money being used to foster the growth of the business is used for fuel bills.
Rents are rising in the UK, both residential and commercial space is at a premium. SMEs can struggle with growth as they can’t afford a large enough workspace for their whole team. If you are thinking of ways to save money on your workspace many towns and cities across the UK have business centres with affordable offices in various sizes.
The aim of every company other than making profits is satisfying their consumer. For the small and medium-sized business, fulfilling the consumer’s desires is always a bit challenging. Influencing these are the enormous consumer demands which the SMEs cannot meet due to limited business finance.
According to most SMEs, labour costs adversely affect their growth. With the minimum wage increasing every year and pressure for employers to pay a “living wage”, as well as the new pension regulations, less established businesses can find they are struggling.
What needs to be done to save SMEs
If small and medium sized companies embrace proper business budgeting, then solving the growth problem they have been facing would be an easy task. This is because, through correct business budgeting, an entrepreneur can set aside some extra business finances just in case operation costs of the business rise abruptly.
If your small or large business could benefit from some professional accounting help, get in touch with the experts at Neil Smith Accountancy. We strive to ensure all of our clients’ businesses are running in the most efficient way possible to help them turn a profit.