Rising business costs not slowing SME growth plans
Business costs are increasing but it not impacting heavily upon the growth aspirations of UK firms, according to a new survey from Clydesdale Bank.
After questioning 750 small business owners, the majority revealed that overheads are rising yet they showed few signs of slowing their expansion plans.
Two thirds of SMEs reported that materials, salaries and energy costs were all higher in the past 12 months than in previous years.
Some sectors were more concerned with rising costs than others, with those in manufacturing, hospitality and the legal sectors all voicing concerns.
Although SMEs are facing challenges, 66% of those questioned revealed bold investment and expansion plans – focusing on boosting staff numbers alongside the purchasing of new equipment and premises.
In terms of turnover, one third of SME owners believe it will increase by an average of 11% in the next year, while 48% expect it to stay broadly the same.
Some 16% said that sales may drop however, highlighting that concerns remain for some businesses even as the economy continues to show signs of improvement.
Many of the firms that are still expanding in the face of rising costs are doing so because they have the financial flexibility to do so.
However, this is not the case for all small businesses and those operating on tight budgets must be careful not to overspend.
Those that are not watchful of their finances could end up requiring the assistance of an insolvency practitioner in order to keep trading.
But with good financial management and clear targets, many of the firms should be able to build for a successful future.
Reducing operational costs will help with the situation yet further and this can be done in a number of ways.
Promoting and training from within can help to cut recruitment costs while simple steps to reduce energy consumption can help to bring down bills.
Even something as simple as turning off lights and machinery at the end of a working day could bring about significant savings over the course of a year.
By Phil Smith
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