Running costs for small firms are climbing higher today than at any time for at least three years, indicating the global financial crisis has intensified inflationary pressures.
Budgets for almost all items vital to small enterprises have increased dramatically since 2005, with expenditure shooting up the most for gas, electricity, fuel, and insurance.
Lesser but still significant cost increases have come from the higher price of raw materials, postal services and professional services such as tax and legal expertise.
To an extent, some of these price rises could have been offset by the less money small firms have forked out for office furniture, advertising and financial services.
But out of the 20 items of expenditure for small firms tracked by More Than, just five - vehicle rentals, advertising, financial services and telecoms, have got cheaper. Advertising saw the biggest decline of 3.1%.
The insurer said that micro firms, businesses with between 1-9 employees, have been hit the hardest and saw costs leap 3.5% over the last quarter, equating to inflation of 10% on last year.
Costs for small firms, with between 10-50 employees, grew slightly more slowly – 3% over the last quarter and 9.0% over the last year, according to the group’s inflationary index.
Small businesses in the north have been hit hardest by the cost increases, given that prices in the region have risen 3.9% over the last quarter and 11% over the last year. London-based firms fared better but not as good as their counterparts in Edinburgh, where their inflation for the quarter was just 2.8%.
Mike Bowman, head of More Than Business, said that a lack of existing data provided the spur for creating a purpose-built measure of small business inflation.
The result was the quarterly Business Inflation Guide, which started in 2005 - when inflation for micro firms was just 1.7%, compared with the record high today of 3.4%.
”Now we have a true picture of rising costs for small businesses, people will be asking the government what realistic measures can be taken to support them,” Mr Bowman said, “particularly in the current economic climate.”
Sep 29, 2008
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