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For a successful business, you need a viable business idea, the skills to make it work and the funding. Discover whether your idea has what it takes.

Forming your business correctly is essential to ensure you are protected and you comply with the rules. Learn how to set up your business.

Advice on protecting your wellbeing, self-confidence and mental health from the pressures of starting and running a business.

Learn why business planning is an essential exercise if your business is to start and grow successfully, attract funding or target new markets.

It is likely you will need funding to start your business unless you have your own money. Discover some of the main sources of start up funding.

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Businesses are required to comply with a wide range of business laws. We introduce the main rules and regulations you must comply with.

Marketing matters. It drives sales and helps promote your brand and products. Discover how to market your business and reach your target customers.

Some businesses need a high street location whilst others can be run from home. Understand the key factors from cost to location, size to security.

Your employees can your biggest asset. They can also be your biggest challenge. We explain how to recruitment and manage staff successfully.

It is likely your business could not function without some form of IT. Learn how to specify, buy, maintain and secure your business IT.

Few businesses manage the leap from start up to high-growth business. Learn what it takes to scale up and take your business to the next level.

Small business costs still rising despite slowing inflation

15 October 2024

New research finds that UK small firms are still burdened by high prices and business owners say they are not seeing the benefits of falling inflation.

Nearly half (49%) of small businesses say they have not benefited from falling inflation this year, according to a new poll commissioned by SME lender iwoca. It comes as the latest ONS data is widely expected to show inflation falling below the Bank of England's target rate of 2%.

The research reveals that the cost of doing business is too high for half (50%) of the UK's 5.6 million small and medium-sized companies. Just 15% of SMEs polled say that they haven't experienced cost increases over the past six months. Other key findings show that:

  • 28% of small firms cite soaring energy bills as their biggest cost increase;
  • 23% point to business supplies being more expensive.

With costs going up, nearly half (45%) of small businesses predict that they will have to raise their prices over the next six months:

  • 37% expect their prices will increase by more than 5%, significantly higher than the current rate of inflation;
  • 20% predict a price spike of more than 10% in the coming six months.

"The UK's 5.6 million SMEs have had a tough few years and, despite falling inflation over the past year, the business environment remains challenging. More and more companies expect their prices to rise faster than inflation, and this could have major knock-on effects for the economy." Mark Di-Toro,director at iwoca.

Case study: Lunch'd

Oli Perron is the founder of Lunch'd, a catering company delivering meals to businesses across London, Birmingham, Manchester and Bournemouth in Dorset.

"During the pandemic and up until the end of 2023, the primary expenses for our business have been rising and rising. It's true that inflation and interest rates have been coming down, but our core expenses on everything from food costs, rent, energy and wages to fuel are still way higher than they used to be.

"From 2021 to 2023, food costs skyrocketed by 27% and our energy went up by over 200%. Despite marginally lower interest rates, which in reality still means prices going up and up, we are still feeling massive cost pressures every day ... We try to do everything we can to retain great talent and ensure our chefs are paid fairly too - we won't compromise on this, but it means cost pressures are still high."

Is wage inflation slowing for small firms?

The latest earnings figures from the Office for National Statistics (ONS) indicate that wage inflation is falling across the UK. It reports that: "In real terms, real regular pay growth on the year was 1.9% in June to August 2024, down on the previous three-month period, when it was 2.2%." However, it seems that wage growth among small businesses may be far higher, according to new research by Employment Hero.

Employment Hero's SmartMatch Employment Report uses real-time payroll data from 90,000 employees at UK small businesses. Its data suggests that wages for full-time workers at SMEs grew 8.2% in the past year to September. The growth has accelerated in recent months, with wages increasing by 2.9% between August and September and by 4.1% over the last quarter.

Commenting on the findings, Employment Hero UK md Kevin Fitzgerald said: "This high wage inflation is not sustainable for small and medium businesses long term, and the government is adding huge costs to these employers with its employment package - costs that could send them out of business. While headline inflation has dropped off, the persistent rate of services inflation reflects the real burden of these massively growing wages."

Written by Rachel Miller.