SMEs Struggling with Rising Operating Costs

The latest figures from the Close Brothers Business Barometer, a quarterly survey analysing trends in the British SME sector, shows that the majority of small firms in the UK are being affected by increasing running costs.

Almost 60% of the nation’s small and medium businesses are facing this issue, which has had a negative effect on their cash flow and ability to grow.

Mike Randall CEO of Close Brothers Asset Finance, said: “Operating costs have increased significantly over the past few years, and are arguably one of the most difficult things for small business owners to manage in the current climate.

“We work with businesses across a range of sectors and we can see that they are all concerned about operating costs, which is unsurprising given the energy requirements, raw materials and machinery that many require.”

What are the most expensive running costs for SMES?

Rising energy bills were pinpointed as a major concern by around two fifths of business owners facing increased operational expense. More than a quarter cited the cost of raw materials and stock as being the main pressures on cash flow.

Despite the added expense, many businesses said they weren’t able to pass this on to their customers in the form of higher prices.

In light of these findings, Mr Randall is urging business owners to plan ahead and be prepared.

He said: “This is a situation that is leading to increased pressure on already-tight margins and it is entirely possible that operational costs will continue to rise for the foreseeable future.

“Our advice is that if you haven’t thought about your business finances for a while, then this is a good time to ensure your funding is structured to cope with this strain on cash flow.”