Small businesses feeling the crunch

One in ten small firms can no longer afford to run their business, according to new research from RSA, experts in small business insurance.

The research revealed that the credit crunch has forced approximately 470, 000 small and medium sized businesses (SME’s) into a position where they can no longer afford to operate.

The research illustrates the difficulties for small businesses in coping with the economic climate, showing that 81% of employers have experienced rising costs from suppliers, 56% of which have had to pass these costs on to consumers.

Mark Skinner, Small Business Director at RSA, said: "SMEs are the backbone of the UK economy and are facing tremendous pressures in these uncertain economic times.

"Increasing costs, a decline in consumer confidence and a lack of credit all add to the difficulties SMEs are facing. It is only natural they should look to reduce costs where possible. But they should not cut corners by doing without insurance.

"It is at times like these that businesses are most at risk though, with increased instances of recessionary related events such as theft and criminal damage."

Rent of premises is also on the rise, with 11% of businesses saying this has had a significant impact on business.  Further cost increases included fuel prices, with 30% citing this as significantly impacting business.

The research showed that small businesses in Greater London are not feeling the crunch quite as badly as those further afield. This is likely due the fact that those living in the capital are already used to paying more for their premises. Only 47% of small business owners in Greater London have been impacted by increased fuel prices, compared with 95% of those in the West Midlands.

Mark Skinner adds, "Small Business owners can talk to their insurance brokers for advice on cover options and risk improvements that can help save them money. They can also look at monthly premium payment options to help spread the cost of insurance. RSA offers Small Business owners a range of risk improvement and premium finance options through brokers."

If your small business is feeling the effects of the crunch, you may find some of the articles on our advice page useful. In particular, see Cutting carbon, cutting costs: simple ways to save your business energy, Surviving the credit crunch: top tips for small businesses, and Savings for business; cheap phone, broadband, and uttilties.
 

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