The financial burden of rapidly increasing utility costs is seen as the biggest threat to small businesses’ survival, according to new research.
In a survey of small business owners, 78% of respondents said that rising energy and utility costs was a concern regarding their company’s future.
This was higher than business taxation with 77%, the effect of the economy on the business (73%) and the amount of red tape that the firm has to deal with (71%).
The survey, conducted by Hiscox Insurance, supports a growing fear that rising energy prices are the main obstacle to business growth in the UK. In the retail sector, the pressure on retailers caused by energy and rent increases has been exacerbated due to its effects on people’s willingness to spend, the British Retail Consortium has observed.
The survey also revealed that small firms are becoming increasingly concerned about risk management issues, with 59% of small businesses owners spending more time on risk management issues than they did two years ago.
In addition, 70% believe they are more likely to be subjected to a frivolous legal claim due to the rise of a ‘no win, no fee’ legal culture.
Vandalism and theft are also causing small businesses owners increasing anxiety, with nearly a quarter having suffered from one or both in the last three years, costing an average of £2,504.
The top ten concerns for small firms also included competition, compliance with UK company law, and technology malfunction.
Gary Head, professions underwriting director, Hiscox, commented:
“The inaugural Hiscox SME Risk Barometer reveals a sector under considerable pressure, whether it be dealing with rising energy costs, fighting their way through business taxation rules or interpreting the myriad government regulations they now face.”
© Crimson Business Ltd. 2006
