True cost of inflation soaring for building services firms
Small m&e contractors are facing cost increases of 11.1%, double the general rate of inflation, according to the newly launched Business Inflation Guide from More Th>n Business.
In the second quarter of this year alone, building contractors, electricians and plumbers were hit by cost increases of 4.2%, largely due to rising raw material and fuel costs.
“We suspected that UK contractors were under great cost pressures but we could find no data to confirm this. So we set out to create the first purpose built measure of small business inflation. The results surprised even us,” commented Mike Bowman, head of More Th>n Business.
“Now that we have a true picture of rising costs for contractors, people will be asking the government what realistic measures can be taken to support them, particularly in the current economic climate.”
The Business Inflation Guide (BIG), developed in conjunction with Warwick Business School, reveals that small businesses are bearing the brunt of price increases across almost all expenditure items, but due to their cost structures, they are suffering more than general inflation indicators suggest, in everything from fuel and energy to labour costs and raw materials.
“When costs are rising contractors really should leave no stone unturned in the search for savings,” continued Mike Bowman.
“The top priority, if they haven’t already done so, should be to review all suppliers and negotiate on prices and payment terms - particularly with regard to energy suppliers and other important cost items. Seeking more efficient ways to use energy in the future should also be a priority.”
Stephen Roper, Professor of Enterprise at the Centre for Small and Medium Sized Enterprises, Warwick Business School said: “The Business Inflation Guide fills a gap in our understanding of the pressures on small firms. This index, supported by More Th>n Business, gives us a robust and quantifiable insight into the costs faced by small businesses in an increasingly difficult economic climate.’’
Electrical and Mechanical Contractor