By Esme Caughey
The cost of living crisis affects the majority of people up and down the country, and is making life difficult for many families and companies. It started in 2021 when prices for things like electricity and oil began to steadily increase. As time went on many more essential goods went up in price, leading to some people being put into extreme poverty. According to the Forbes Advisor October CPI report (https://www.forbes.com/advisor/personal-finance/inflation-update-october/), the items with the largest price increases over the past 12 months are Meats, Poultry, Fish and Eggs (with an 8% increase), Fruits and vegetables (with a 9.3% increase), Electricity (with a 14.1% increase), Utility Gas service (with a 20% increase), Rent of primary residences (with a 7.5% increase) and Airline fares (with an increase of 42.9%).
One of the groups most affected by the cost of living crisis is small business owners. The increasing costs in many essential items is putting a lot of pressure on small businesses, who have already been challenged by the pandemic. The metro lifestyle report on “How the cost of living crisis is impacting small businesses” (https://metro.co.uk/2022/09/17/how-the-cost-of-living-crisis-is-impacting-small-businesses-17391319/amp/) states that government figures show 2000 registered businesses in England and Wales closed down in August, leading to a 43% increase from the same period the year before. The article also says that the total number of companies going out of business has risen to 20,000 this year so far, which is a 72% increase from last year.
One of the main reasons small businesses are closing down is because customers are unable to afford their items. As the cost of electricity, rent and stock go up in price, small business owners are forced to increase the value of their merchandise and due to the knock on effect, they have to pass the additional costs onto their customers. Unfortunately, their customers are also dealing with the pressures of the cost of living crisis, meaning they don’t always have the money to pay the higher prices. With this reduced clientele small businesses have less people to sell to, meaning less money is coming in, leading them to go bust. According to the Nucleus Commercial Finance survey (https://nucleuscommercialfinance.com/blog/how-is-the-current-cost-of-living-crisis-affecting-uk-businesses), 72% of business owners are concerned that the cost of living crisis is going to affect their company, and 68% think their customers won’t be able to afford their products.
The article states that the five biggest concerns for businesses at the moment are Cost of fuel, cost of energy, cash flow, employee retention and transportation costs, all of which are proving to be big issues financially.
Fortunately, there is some hope. There are many websites offering advice and support for small business owners, such as the London Business Hub (https://www.businesshub.london/resource/government-support-for-business-2/), who give lots of information about recovery loans and useful helplines. We can also do our bit by making use of the local businesses around us, choosing to buy from them instead of big corporations.
The cost of living crisis is making life hard for everyone, but by supporting your local businesses, you could be helping them and their business survive this difficult time and making sure that your favourite shops and cafes are still here for many more years to come.
