Cost of Living Crisis and How This is Affecting Businesses

Many business owners might not have experienced a time as turbulent as the times we are living in right now. Following the pandemic, we thought that life would go back to normal but other issues have occurred that have forced the UK and the rest of the world to deal with rising prices across almost every area of our lives. From rising living costs to inflation, businesses have had to show a new level of resilience in order to survive. With this in mind, how is the cost-of-living crisis impacting businesses?

What Are the Main Concerns For Businesses?

Almost three quarters of business owners are worried about the ongoing crisis and almost 25% are concerned that they will not survive. In addition to this, businesses are worried that consumers will not be able to afford their services or products. Therefore, data suggests that the five biggest concerns are:

• Fuel costs
• Energy costs
• Cash flow
• Retaining employees
• Cost of transportation

Fuel Costs

Fuel prices have soared in recent months and this is going to have a direct and indirect impact on businesses. Of course, those businesses that will be impacted by the price rises are those that operate in the delivery and transportation industries. Along with this, supply chains are impacted as a result of rising fuel prices and so, many will have to pass the increase on to clients.

Energy Costs

This is quite possibly the biggest problem that businesses have been facing with some facing an increase of tens of thousands of pounds in energy costs. Some businesses could be facing a 250% increase in energy costs and that is likely to cripple many businesses. Along with this, there is an indirect impact of energy costs as clients will also be seeing a rise in energy costs which might mean a decrease in disposable income which is money they won’t be spending with businesses.

Cashflow

Business owners are also concerned about cashflow because a healthy cashflow is vital when running a successful business. There are many businesses that won’t have a large reserve of cash that they can fall back on and if they are facing higher costs and a drop in clients, then they will have to manage their cashflow more efficiently.

Retaining Employees

The cost-of-living crisis is having an impact on employee retention. This is because everyone is facing an increase in costs and people are now searching for better paid jobs to increase their salary in an attempt to make it easier to cover the cost of bills. As a result, businesses might be forced to increase wages to attract employees which could leave them facing problems in the future.

What Can Businesses Do?

While there is a cost-of-living crisis hitting businesses hard, they should look at their finance options as soon as possible. The earlier they make that decision, the more likely they are to find the financial backing they need as lenders will be able to responsibly lend due to affordability. So, if your business is looking relatively comfortable at the moment, why wait until things could get worse to take action? You might find that the help you require is no longer available.