In total, a huge 95 per cent of small businesses surveyed by the Forum have seen an overall increase in costs in recent months. Specifically, 85 per cent reported an increase in energy costs, 88 per cent in transport costs, 82 per cent a rise in marketing costs and 73 per cent an increase in the cost of raw materials and stock.
Some 81 per cent of firms indicated that changes in costs have been detrimental to their businesses, 66 per cent reported cash flow issues as a result and 56 pre cent said cost rises had been detrimental to employment. Worryingly, 69 per cent feel that spiraling costs have inhibited growth ambitions.
Amid reports that British Gas is set to increase customer prices, in parallel to oil prices rising again following a dip in the summer and ahead of January’s 3 pence per litre spike in fuel duty, there are fears among smaller employers and other business owners that a prolonged spell of bad weather this year could turn the festive season into another winter of discontent.
The knock-on effect of continued bank lending restrictions was also probed in the research. Tight credit restrictions have meant that businesses have not been able to access finance to mitigate the impact of increased costs and 41 per cent of respondents said they now have less leeway in coping with business costs than they had in 2011.
Clearly, improving small business finance is important for economic growth and, with banks not lending at affordable rates and late payment mounting, allowing firms to more easily control costs should be central to that process.
The Forum believes ministers should launch a call for evidence on the use of mandatory e-invoicing for all prime contractors to the public sector in order to tackle late payment.
Further, the present NI holiday for small businesses should be amended from the first ten employees taken on by a new business to the first two additional staff recruited by any business. Having adequate safeguards in place would prevent misuse of this incentive, which could be extended to support employment in a much wider range of businesses.
Finally, the cost to businesses of auto-enrolling their staff into pensions could be offset by government concessions in areas such as flexible working. The sympathetic introduction of the Government’s new pension policy has been essential – but businesses must be in a financial and administrative position to implement it.
