Seven out of 10 small and medium businesses in the UK are facing a daunting reality – the fear that rising costs could potentially lead to shutting down. A recent survey of 500 small businesses unveiled that a staggering 88% are actively trying to cut overhead costs, yet a significant 69% still worry about the possibility of closure.
The main culprits behind this financial strain are the relentless increase in material costs, with 49% pointing fingers at this factor, and hidden fees charged by banks, blamed by 19% of businesses. In fact, small British businesses are estimated to be forking out over £3,700 annually in concealed charges for international transactions, which could amount to three months’ worth of rent in major UK cities.
To shield customers from potential price hikes, many businesses are taking proactive measures. About 35% are negotiating better rates with suppliers, while 31% are cutting back on energy use. However, despite these efforts, a disheartening 56% have had to resort to implementing redundancies, with a massive 84% considering it as a last resort.
The research, commissioned by Wise, sheds light on the pressing need for transparency in fees charged for international transactions. Arun Tharmarajah, director of European payments at Wise, emphasized the tough decisions business owners are grappling with in these challenging times. He highlighted the unfair fees hidden in exchange rates that often affect businesses transferring money overseas.
Other challenges faced by small businesses include increased shipping costs (39%) and staff wage hikes (35%). A whopping 89% believe their businesses would have been more profitable in the past year if costs hadn’t skyrocketed. As we head into the festive season, concerns about high energy prices loom large, with a quarter of businesses believing this Christmas will be the most crucial they’ve ever faced.
Tharmarajah stressed the importance of agility and creativity in finding solutions that don’t negatively impact customers amidst rising costs. He also advocated for ending hidden fees through legislation as a cost-free way to support small businesses. Davide Troise, founder of Troise & Sons barbers in London, shared his plans to expand into Europe but highlighted the challenges he faces when dealing with UK banks for international expansion.
As small businesses navigate through these uncertain times, finding innovative solutions and advocating for fair practices remain crucial for their survival and growth.