Seven in 10 small and medium businesses are feeling the pinch as rising costs threaten their survival, a study of 500 small UK businesses has found. Despite 88% of businesses claiming they are doing everything they can to reduce overhead costs, 69% still fear that their business may be forced to close.
The main culprits behind this financial strain are the ongoing increase in material costs, cited by 49% of businesses, and hidden fees charged by banks, blamed by 19% of respondents. Small British businesses estimate that they are shelling out over £3,700 annually in hidden charges or fees for international transactions, which could equate to three months’ worth of business rent in major UK cities.
To combat these rising costs, 35% of businesses are trying to negotiate better rates with suppliers and 31% are cutting back on energy use. However, despite these efforts, 56% have had to resort to implementing redundancies, with 84% of those stating it was their last resort.
The research was commissioned by Wise, which is pushing its End the Opt Out campaign to change legislation so small businesses have transparency on fees charged for international transactions. According to Wise’s research, these fees amount to a staggering £2.8bn per year.
Arun Tharmarajah, director of European payments at Wise, emphasized the challenges facing small businesses during these tough times. He highlighted the impact of hidden fees on businesses that transfer money overseas and stressed the importance of ending the practice to alleviate financial burdens on small businesses.
Other struggles facing small businesses include increased shipping costs (39%) and staff wage increases (35%). Despite these challenges, 89% of businesses believe they would have made more profit in the last year if costs had not skyrocketed.
As the festive season approaches, over a third (35%) of businesses are concerned about the impact of high energy prices. This sentiment is echoed by a quarter of businesses who believe that this Christmas will be the most critical their business has ever faced.
Arun Tharmarajah emphasized the need for small businesses to remain agile and creative in finding solutions to rising costs without negatively impacting customers. He urged for an end to hidden fees and improved legislation to support small businesses in navigating financial challenges.
Davide Troise, founder of Troise & Sons barbers in London, shared his experience of expanding his business into Europe and the hurdles he faced dealing with UK banks. He emphasized the importance of transparency and fair practices to support small businesses looking to expand internationally.