Small businesses hit hardest by inflation

Lack of negotiating clout may mean small firms will come off worse from inflation

UK small businesses are worried they will be hit hardest by inflation as they lack the influence of big businesses, new research has found.

According to small business bank Aldermore, small and medium firms are increasingly concerned that their margins will be squeezed as the price they pay for goods rises without them being able to pass on those increases to their customers.

Of the small and medium sized businesses surveyed, 80% said they were concerned that their suppliers would force above-inflation cost increases on them, while only 45% felt they would be able to increase their own prices.

Phillip Monks, chief executive of Aldermore, said: “Small businesses are worried that the lack of negotiating clout with both their suppliers and their customers means that they are going to come off worst form the current spate of inflation.

“Big businesses with dominant market shares are going to find it easier to pass on price increases to their customers and wring concessions out of their smaller suppliers. Unfortunately many small businesses don’t have that kind of negotiating power. Few businesses like inflation but small businesses probably least of all.”

© Crimson Business Ltd. 2011

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