Small businesses feel the squeeze

Rising costs force longer working days just to break even

More than two thirds of small businesses are feeling the squeeze from rising costs – including energy, transport and raw materials.

Research by American Express and Cosco revealed that 69% of small business owners are concerned by this year’s difficult trading conditions.

Consequently, they are seeking to maximise sales in the run up to Christmas by working longer hours than ever – with some simply aspiring to break even.

More than half of the respondents said they have struggled to pay for stock upfront this year and that the cost of buying stock is significantly higher than in 2010.

Commenting on the complaints, Forum of Private Business spokesman Robert Downes said:

“The vast majority of our members have seen the cost of doing business increase during 2011. Energy price rises have been reported by 94%, 92% have seen rises in transport costs and 82% have seen hikes in the price of raw materials.

“Many have also had to absorb cost increases themselves rather than passing them on to customers, so clearly this affects profit margins. Even for firms that are going the extra mile, it’s very often just for standstill results.”

However Michael Ogilvie, chartered accountant for OBC, argues that small businesses can profit from the festive season, by employing “a mix of cost management, good pricing and successful promotion.”

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He added: “Too many firms discount unnecessarily at Christmas, thinking that this is what customers want. But the goal should be to encourage customers to buy more – look at what makes an attractive bundle of goods or services, or offer a special price for multi-buys.”


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