Small businesses struggle to absorb soaring costs

Stuart Hignel, who runs Bristol Gas Supply, has known many of his clients in the English city of Bristol for years – he has a Polaroid picture of one of his elderly clients on the cork board behind his desk – and he is aware that many of them are on regulars. Revenue.

But as fuel prices rise and gas supply costs across the city increase, Hignell is forced to make a difficult choice: raise prices for its customers or protect them by absorbing increasing costs.

“How can I contact these people and tell them their prices are going up?” He asked. “But something has to give – you can not just keep sucking it and pumping it in.”

Many small business owners, like Hinel, are struggling to absorb the impact of upside-down prices when UK inflation peaks at 40 years. Rising energy costs and goods and services have become two of the leading concerns of businesses across the UK.

In June last year, only 30% of businesses in the UK with 10-49 employees reported to the Office for National Statistics above normal input prices. By March this year, the rate had jumped to 57%.

Many can no longer stop the transmission of these increases to customers. Alexis Gailens, who runs a costume rental company on the outskirts of Bristol, struggles to think of any product or service his business uses that has not become more expensive. While his company “tried to hold back as long as we could,” he said, it had to start rolling costs.

Gailans Not Alone: ​​About 41% of businesses in the UK with between 10 and 50 employees indicated in late April that they had already started raising prices.

Alexis Gailens
Alexis Gailens, who runs a costume rental company, was forced to start rolling in costs. © Charlie Bibi / FT

Matt Griffith, policy manager at Business West, the UK West Chamber of Commerce, is in close contact with many organizations in the area and it is clear they need to start reimbursing costs. Raising prices is “the only route left” for many, he said. “Economically they have nowhere to go.”

Vicky Lee, who heads the district for business improvement in downtown Bristol, agreed. Many of the companies she works for in the city center are unable to lower their costs. They do not have “purchasing power, the power to reduce the cost per unit by purchasing on a larger scale,” she said.

Line chart of one year change in the Consumer Price Index (%) showing that consumer price inflation in the UK reaches the highest level in 40 years

She added that the plague shadow continues to affect many small businesses in the area. Although they managed to “get back quickly”, they had to borrow to continue during the crisis. Debt repayments on these loans have further tightened margins and pushed businesses to raise prices.

Transferring the increased costs to customers was not an easy decision for many small business owners, despite the challenges of the current environment, said Chris Jenkins, who has worked in Bristol’s wholesale fruit market for most of his life. Faced with steep transportation costs, his company tried to streamline.

Vicky Lee
Vicky Lee, who heads Bristol’s downtown business improvement district, said companies do not have “purchasing power, the power to reduce the cost per unit by purchasing on a larger scale.” © Charlie Bibi / FT

“We have no excess staff at all. We all work constantly all the time. And we just have no fat. It’s just cut, cut, cut wherever we can go to try and minimize costs,” he said, adding that there is “nothing else they can do.” To lower prices.

The effect of rising prices on consumer spending is another concern. Jeremy Kinston CEO No1 Harborside, a bar, restaurant and live music venue located in Bristol’s historic harbor and two other places in the city, admitted that people are just starting to feel the rise in prices, but he hopes they will continue to eat out.

Chris Jenkins
Chris Jenkins, who works in Bristol’s wholesale fruit market, said the outlook is gloomier than ever © Charlie Bibby / FT

“When people go out, they know it’s going to cost a little bit more, and it’s up to us to make sure we’re smart about our quality and standards,” he said.

However, Keystone is concerned about the impact that the rise in the fall in energy prices ceiling will have on his business. Ofgem expects household energy prices to rise by about 42% in October, after rising by 54% in April.

“It’s daunting – the price in October is going up. But we at least have a plan. It’s better than no plan at all,” Kinston said.

To tackle the impact of rising energy prices on living costs, British Chancellor Rishi Sonek last week unveiled £ 15 billion Support package. This included a one-time payment of £ 650 to about 8 million households that received welfare payments.

Jeremy Kinston
Jeremy Kinston, CEO of No1 Harborside, Concerned about Impact of Rising Energy Prices in Fall © Charlie Bibby / FT

But those at the top of the supply chain, like Jenkins, fear that even with the extra government support, raising energy prices will suck demand from the local economy.

“In November, December, they [households] He’s really going to feel it, “he said. He added that the pressure on household budgets in the coming months could cause the fruit he sells to retailers to become” more luxurious. ”

Most economists recognize that price pressures may worsen before they improve, but anticipate that the energy shock, epidemic supply chain effects and high interest rates will diminish fairly quickly from next year onwards.

However, for Jenkins it is hard to find hope that a brighter period is expected.

“I’ve been in the role all my life. I was born into it,” he said. “All this time, you could always see the light at the end of the tunnel. You can not see it now.”

Small businesses struggle to absorb soaring costs Source link Small businesses struggle to absorb soaring costs

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