As Heinz Craft, Mars and Tesco show King's Lynn businesses hit by rising costs, increased fuel, energy and inflation
Like many households, businesses are under pressure in the face of rising costs and, just as increased fuel, energy and inflation are biting at many of our pockets at home, local firms are suffering from a wave of financial challenges.
The ultimate challenge many are facing is the ability to withstand and absorb rising operational costs, without passing these along to their customers and risking losing business.
Inflation has hit a 40-year high of 9.1 per cent and could still rise further, and for many companies the increase in product or material costs, operational expenses and pressure to address wage rises to support employees is forcing many to put their prices up, or risk trading negatively.
The issue made headlines recently with Heinz Craft and Mars refusing to supply Tesco with their products after the retail giant refused to ‘pass on unjustifiable price increases’. It’s a tight spot with manufacturers arguably unable to bear the rise in costs any longer, and customers equally unwilling and unable to afford a surge in retail prices.
In a recent survey by the British Chambers of Commerce, a record number of businesses say they intend to pass on the rising cost of energy and raw materials to their customers. More worryingly for the future, with sales and confidence weakening, three in four firms surveyed also said they have no plans to increase investment and more than a quarter predict a drop in profits. While the immediate pressure on businesses is apparent, the long-term effects of a lack of investment bodes worryingly for the future of the UK’s trade and industry.
While the outlook appears bleak, things do change and there is not doubt that enterprising businesses will weather this storm, as they have previously during challenging trading conditions. Chief among the tools a company can utilise to maintain a regular cashflow and to protect reserves is to use business finance.
Lending products such as invoice discounting which releases cash against money owed by clients, in advance of payment, and a merchant cash advance, which provides a lump sum against future card transactions, are quick ways to ease immediate pressures on cashflow. Many manufacturing firms are unaware that specialist equipment or machinery is eligible for asset finance which could release precious funds back into a business.
By acting now, before pressures mount, businesses in our region can plan a way to navigate these challenging trading conditions and ensure they are in a better position for the months in front of us. It is always, without exception, far better to plan ahead as there will be more options available which provide choice and a considered way forwards, rather than waiting until it’s too late.
My simple message to local firms is don’t struggle in silence – we understand the pressure many business owners are under and are here to help with practical advice and solutions, so please do get in touch.
For more information, contact Karl Lanham at CCF on 01553 611619 or visit ccf.finance