Back to all Blog posts
Cost Woes Undermining Business Confidence
Posted by Sam Talby on 11/22/2011
In September 2011, Bishop Fleming undertook a survey of owner managed businesses in the South West, asking specifically how their businesses had been affected by the rising energy, transport, and food costs.
Respondents advised they were adversely affected as follows:
41% identified increased transport costs
25.6% identified increased energy costs (gas, electricity and oil)
Most householders in the region will recognise how increased costs and energy prices are affecting their disposable income; it is therefore not surprising that these same factors are affecting the region's businesses.
A standout response from the survey was that 32.5% of respondents believed the South-West was at a disadvantage regarding transport and energy costs to the extent that the region's businesses were potentially less competitive than other regions.
37% informed us that those cost increases would force them to cut jobs and investment, and a further 40% were considering similar cuts.
Another major concern was the ticking time bomb of wage and cost inflation. Respondents recognised the pressure of cost inflation on their employees' incomes, and were split between those experiencing pressure for price rises to match cost inflation, and those whose employees accept that zero pay rises are "better than losing their job".
As a Restructuring and Insolvency Practitioner, it is apparent to me that some SME and Owner Managed Businesses could find themselves under extreme pressure. The volcano of costs facing businesses could explode, forcing even those businesses that are finely balanced into extreme financial difficulties.
If there is concern regarding the viability of a business, it is always better to seek advice immediately. At Bishop Fleming Business Recovery & Insolvency, we always look for alternatives to formal insolvency, emphasising Recovery Procedures where possible.
All information correct at time of posting.