Rising overheads leave shop owners anxious

More than half of all independent shop owners fear for their survival if small business overheads continue to rise at their current pace, a new study has claimed.

In a survey of local shopkeepers, 60% raised concerns about the resilience of their businesses against a backdrop of spiraling costs. Research suggests small business overheads have grown by a quarter over the past five years.

Jonathan Elliott, managing director of Make It Cheaper — a business price comparison service — which undertook the study with the Centre for Economic and Business Research (Cebr), said: “Rapid cost increases are placing the survival of small companies in jeopardy, and dampening the entrepreneurial spirit so crucial to economic recovery.”

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Cebr and Make It Cheaper have modelled an inflation tracker for small business overheads, which reveals that average costs have risen 4.5% in the year to July 2011.

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In terms of individual overheads, the biggest risers cited by the Index are transport costs, energy bills and insurance premiums.

82% of retailers said that rising costs would limit their growth this year, with 73% reporting that their profit margins had been hit hard — to the tune of an average 22% — by this trend over the past three years.

59% said they have been forced to increase prices and almost a third admitted to cutting staff.

“Government policy needs to curb business cost inflation this year. However not all threats identified by entrepreneurs are outside of their control,” said Elliot. “By shopping around, comparing prices, regularly switching suppliers and taking care not to get caught in contract renewal traps, companies can go a long way to bringing their overheads, such as energy, under control.”

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