British businesses are fighting to stay afloat as current economic pressures lead almost seven in 10 (69%) to seek cost-saving measures, according to new research from the business experts at Forbes Advisor.
The study quizzed senior decision makers across a range of small and medium-sized UK businesses, with 82% of business leaders stating the cost-of-living crisis has had a negative impact on their company.
Despite their best efforts to cut back on costs by switching their providers or negotiating existing agreements for general business expenses, two in five (40%) SMEs failed to make any savings.
Rent in business premises topped the list as the hardest cost to save money on, as almost one in five (19%) British businesses unsuccessfully attempted to negotiate an existing deal or moved location to shave a few pounds off their bill. Firms trimming back on employee benefits schemes were also less likely to see any fruits for their labours when looking to save (18%).
In more extreme cases, SMEs have gone as far as scrapping specific outgoings altogether to ensure financial stability. Around one in eight (12%) small businesses (with 10-49 employees) cancelled staff parties and events to save on costs.
While many businesses will be feeling the effects of inflationary price rises, the sharpest increases are being felt in the cost of raw materials and stock (16%), business insurance and office supplies (both 12%).
The findings paint a bleak outlook for British business if the situation doesn’t improve. Almost one in 10 (8%) are considering doing away with employee commissions, while 7% are also considering canning advertising and marketing spend. Critical expenses, such as business insurance and cybersecurity, are also creeping onto the at-risk list for 6% of British firms.
Kevin Pratt, financial expert at Forbes Advisor, said, “Just as consumers are feeling the effects of the cost-of-living crisis, economic pressures are also putting a strain on SMEs. With expenses rising across the board, firms are seeing margins shrink. Our research clearly shows many businesses are looking to minimise financial pain by cutting back on outgoings.
“However, despite the majority of British companies seeking out cost-saving measures, three in 10 SMEs are still yet to explore money-saving methods. Simply looking to switch suppliers or renegotiate current agreements could result in huge savings for many.
“During these challenging times it’s important to maintain a steady flow of management information to help inform decisions and strategy. Using business accounting software will help you keep track of expenditure so you can build a bigger picture of where your money is going. Only when you know this can you formulate a plan to make essential savings.”
However, some businesses are seeing success in the efforts to cut costs. Almost a third (32%) of UK SMEs have renegotiated their existing advertising and marketing agreements to get a better deal. In addition, switching providers led to more than half of businesses making savings on their medical insurance (53%) and conference call subscriptions (52%).