Spiralling Living Cost Crisis Takes a Toll on Business Confidence
Most stories reported in the press regarding the UK’s escalating living cost prices concern the average household and understandably so, given how up to 40 million are expected to be plunged into fuel poverty before the end of the winter.
Elsewhere, however, economic uncertainty is having a major effect on the UK’s business community. Businesses of all shapes and sizes are facing unprecedented challenges and many are fearful for the very survival of their organisations.
In an attempt to determine just how many businesses are being adversely affected by the living-cost crisis, Nucleus Commercial Finance polled 1,000 business managers. Each of which was quizzed on their main concerns regarding economic uncertainty and the extent to which escalating living costs are affecting their businesses.
Two in Three Expect Tough Times to Come
Writing on behalf of Nucleus, Jessica Lambert indicated that the vast majority of business owners believe things are going to get worse before getting better.
“Our findings revealed that nearly three quarters (72%) of business owners are concerned that the current cost of living crisis is going to affect their company in some way, while 23% of leaders even predict that their business may not survive the financial year if prices continue to soar,” she said.
“Two thirds (68%) think their customers will no longer be able to afford their products, while more than six in ten (67%) think they will lose clientele as their services will be bought less often.”
The data published by Nucleus Commercial Finance suggests that the biggest causes for concern among business leaders right now are fuel costs, energy costs, cash flow, employee turnover, and transportation costs.
“Fuel prices have hit record highs recently, which will affect businesses both directly and indirectly, so it’s no surprise the price spike in this area was found to be the biggest concern for business leaders across the board,” Miss Lambert continued.
“The most affected companies are likely to be those involved in delivery and transportation, as costs to provide their services will be directly impacted. However, other businesses can still be affected by the rising fuel prices, as it can affect supply chains and the day-to-day movements of employees,”
“Companies with vendors that transport goods will likely have the increased costs passed on to them, as their suppliers try to navigate how to reduce the impact on their own business first.”
Energy Costs a Major Cause for Concern
Skyrocketing energy costs have been blighting UK households and businesses for some time and are once again set to increase over the coming months. Unsurprisingly, a sizeable proportion of business leaders (42%) stated that energy costs represented a major threat to their stability and profitability going forwards.
On average, data suggests that the typical UK SME has seen a gas price increase of around 250% over the past 12 months.
Worse still, businesses are not covered by the government’s energy price caps, meaning increases in commercial energy costs over the course of the winter could be even greater than those of domestic energy.
Cash Flow Crises
Facing the prospect of elevated expenses, UK SMEs also reported unprecedented concerns regarding cash flow.
“Maintaining healthy cash flow is an extremely important aspect of running a successful business, but it’s proving harder and harder to do for many companies across the country,” said Miss Lambert.
“This is most likely the case for start-ups and SMEs who don’t have massive cash reserves to support them when financial challenges arise,”
“This could be especially true if they’re faced with higher costs and the prospect of losing customers, as they may need to be more selective on how they spend their money now costs are soaring across the board.”