A recent survey has found 2 in 5 small and medium-sized enterprises (SMEs) have been pushed to lower staff numbers and decrease their number of sites in order to manage supplier costs.
453 SMEs were surveyed by Forum Group, which found that 66 per cent had seen profit margins decrease due to an increase in operating expenditure.
Forum CEO Bill Papas said the impact costs are having on SMEs is concerning.
“It is worrying that such a large number of organisations feel they need to resort to redundancies to get a handle on hard costs,” Mr Papas said.
“Energy, staff, IT and property costs are increasing and people see these as uncontrollable expenses. While this is true, the trade-off is jobs, innovation and customer service.”
30 per cent of SMEs said they have increased the number of suppliers servicing their business in the last 12 months, while 20 per cent of SMEs said they have actively looked at options to reduce operating expenditure.
“This is a normal method of dealing with high operating costs and while effective in the short term, businesses are still left feeling like they have little control or impact on other costs,” said Mr Papas.
Over half (56 per cent) of the businesses surveyed said they reviewed their supplier contracts every year, yet 60 per cent claim that they are not able to change suppliers due to existing contracts and penalty fees.
“The costs associated with managing multiple supplier arrangements is often overlooked and most business owners and managers don’t have the time or knowledge to identify the best services or suppliers, or how to better manage the increasing cost of doing business,” said Mr Papas.
“They may search online for a quick fix, or perhaps look to their own network and suddenly find themselves in a situation where they have too many suppliers to handle.”