RSS

Small firms can benefit from deflation

Mar 10 2009

New research claims that small businesses are experiencing reduced costs through deflation.

The latest Business Inflation Guide from More Than Business reveals that the cost of running a small firm in Britain is now cheaper than it has been for over a generation.

According to the research, costs for enterprises fell by 2.9 per cent across the UK in the last quarter of 2008, with the northern regions seeing the greatest decrease of 3.8 per cent.

The inflation guide, which measures the cost of 20 items commonly purchased by small businesses, shows that there has been an 18.3 per cent decline in fuel prices, an 11.5 per cent cut in raw materials and a 2.8 per cent reduction in insurance.

Stephen Roper, professor of enterprise with the Centre for Small and Medium-Sized Enterprises at Warwick Business School, which worked on the index, explains: 'As a short-term benefit, deflation will provide a much needed pressure valve for small businesses which are currently very cash constrained.'

However, he also points out that deflation shows demand is low and markets are weakened, which has negative consequences in the long term.

Recent research from Lloyds TSB claimed that cashflow remains a major problem for UK businesses, driven by late payment of invoices by their customers.

Comments

There are currently no comments on this article

Barclays Business Start Up Account

Everything you need in one place from help with planning to getting more customers, to FREE seminars and a credit checking service to help you get paid quicker. Plus, up to 2 years FREE banking (conditions apply). Apply online

Grow your business with factoring, an alternative to business loans

Balance your cashflow with factoring and use the funds to grow your business. The more you invoice the more you can borrow, no need to re-negotiate with the bank. Compare factoring quotes online.

Barclaycard Commercial – Visa Gold and Platinum Credit Cards

Great benefits including Travel Accident Cover, 90 day Purchase protection, extended warranties and cardholder misuse insurance. Plus enhanced business travel insurance for Platinum cardholders. Get up to 56 days’ interest-free credit, when bills are paid in full and on time each month. Also enjoy exclusive discounts in association with Visa, the AA, Rymans, Reed Learning and Daisy Telecom. Find out more.

Would you hire someone over 60?





Site map

« Expand to view
Powered by Wide Area: Content Management for Publishers