SMEs: UK an 'unbearably expensive' place to do business
Aug 11 2011
Spiralling business costs threaten small businesses
Rising business costs are adversely affecting the private lives and personal finances of many small business owners, research finds.
According to a new study of 750 small firms by business saving advisors, Make It Cheaper, and the Centre for Economic and Business Research (CEBR), almost half of respondents (47 per cent) have had no choice but to inject additional cash into their company from personal sources this year.
The vast majority (89 per cent) of small businesses currently view the UK as an ‘unbearably expensive’ place to do business and many are finding they can only survive by supplementing the company with personal finances.
Jonathan Elliott, managing director of Make It Cheaper says, ‘The effects of squeezed margins and cost increases are not only threatening businesses, but the financial security of their owners and families.’
Almost a third of small businesses (27 per cent) have had to turn to friends and family for a loan to cover spiraling costs while a quarter (26 per cent) have taken out a personal overdraft, bank loan (22 per cent) or credit card (25 per cent) for a cash injection.
Some small business owners have been pushed into even more extreme measures, with 13 per cent going as far as re-mortgaging their homes.
According to the Make It Cheaper research, the average amount raised from all personal channels stands at just over £20,400 per business.
Elliott adds, ‘It is extremely concerning that small business owners have been compelled to take the drastic step of placing their own financial stability in jeopardy to keep the company afloat.
‘However, many small businesses feel they have no alternative, as costs rise and traditional lines of credit remain cut off.’
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