Running costs to freeze SMEs predict

MORE than half of Yorkshire SMEs think that the cost of running their business will remain the same or lower over the course of the year.

New research by Bank of Scotland also reveals that owner/managers are intending to freeze customer prices, although 12% expect to buck the trend by hiking their prices by more than 5%.

Around 70% said that they believes that customers were increasingly looking to buy in bulk for discounts while 58% complained that customers were looking to dictate prices.

Pricing stability amongst the majority of small businesses reflects a belief amongst 68% of owners that inflation will either flatten out or decrease over the course of the year, resulting in a period of deflation.

However, the spectre of deflation doesn’t appear to spell out bad news for everybody as three in ten small business owners view such a period as a positive stimulus for their businesses.

Firms are also set to benefit from lower costs such as the purchase of office equipment.

But the region’s SMEs are still concerned over issues such as tax with 45% predicting that rates will increase this year.

Donald Kerr, commercial banking director, Bank of Scotland said: “Contrary to the trend in recent years, small business owners are now anticipating level or even possibly lower running costs over the coming year.

“However, against a background of difficult trading conditions, the majority of entrepreneurs are now being pushed by their customers to reflect these lower costs in lower pricing.”

He added: “Small business owners will clearly have to demonstrate some acute financial acumen in order to balance the need to maintain margins whilst keeping product and service pricing in line with demand.”