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Independents fear for future if business costs keep spiralling

Published:  17 August, 2011

Six out of ten independent retailers fear their business will not survive if costs continue to spiral upwards.

Research carried out by Make It Cheaper and the Centre for Economic and Business Research shows that small business overheads have risen by 23% over the past five years, with 81% of small shops saying cost inflation is limiting growth.

Jonathan Elliott, managing director of business saving advisor Make It Cheaper, said: "Rapid cost increases are placing the survival of small companies in jeopardy, and dampening the entrepreneurial spirit so crucial to economic recovery."

According to the research, businesses have reported an average rise in business costs of 4.5% year-on-year to July 2011.

The sharpest hikes will be transport ? expected to increase by 20.5%, energy bills up 8.5% and insurance ? set to rise 7.1%.

The study is based on independent research among owners and managing directors of 750 UK small businesses.

Profits have been stung at 73% of shops in the past 3 years, to the tune of 22% on average, while 59% have been forced to increase prices and 27% to lay off staff.

Across the UK, 59% of small business owners claim that the high cost of doing business in this country is acting as a disincentive for growth, whilst 86% believe it is damaging economic recovery.

Elliott added: "By shopping around, comparing prices, regularly switching suppliers and taking care not to get caught in contract renewal traps, companies can go a long way to bringing their overheads, such as energy, under control."