Small businesses lack plans to deal with rising costs

According to Barclays’ Small Business Cost Index, the basic expenses of UK small businesses have increased by 3.2% over the last 12 months. This compares to a 1.1% rise for February 2016.

Businesses need a strategy to deal with their rising costs, but the Small Business Cost Index, covered in an April 2017 article, found that many businesses have not made plans.

One straightforward way of dealing with costs inflation is to raise the prices that businesses charge for their products or services. The Index found that 63% of businesses would take this step if costs rise further, but many small businesses have no clear strategy to cope with inflation. The research found that 15% of small businesses did not know whether to raise their prices, and 17% said that they were afraid to do so.

Among sole traders, 42% said that they would likely raise prices. Larger companies with over 10 employees were more likely to increase prices, with 77% stating their intention to do so.

An alternative to raising prices is to review everyday running costs to try and find areas on which cost savings can be made. Expanding the business in other areas, including export opportunities, can increase income and profitability.

Bridging finance is available to raise working capital to fund diversification and expansion. Competition among bridging lenders is fierce, which means that interest rates and fees remain low. A bridging finance broker can discuss the available options and find just the right deal for you.