The majority of SMEs are “grateful” to be in business and generating revenue despite the increased costs, and are prepared to accept up to a 20% drop in revenue, according to a report by MarketFinance.
It revealed four out of five (79%) SMEs have faced increased prices from suppliers over the past six months, with an increase of cost of raw materials ranked top, most felt by businesses in the north west of England (85%).
This was followed by staff shortages, the ongoing impact of the pandemic and supply chain disruptions.
Research also shows a third of SMEs (32%) have been able to absorb the increased costs without passing them on to customers, suggesting that these businesses have the necessary cash reserves to handle the impact.
According to the firm, businesses in the south west of England and Northern Ireland are “least likely to absorb” the costs while businesses in the north west and Yorkshire are the most likely to do so, yet customers are proving to be equally understanding of the wider supply chain situation with only a fifth (20%) challenging business owners about price rises.
Looking ahead to the festive season, MarketFinance has said SMEs feel they “will be able to manage the situation” but some “could” increase prices if the pressure gets too much, with two fifths reported they could increase their prices by as much as 10% in the run up to Christmas.
Anil Stocker, CEO at MarketFinance, said: “The current economic environment with rising costs is presenting some headwinds and headaches for SME owners but they are proving to be as resilient as ever.
“It’s great to see that SME owners are taking the long view and preserving their customer relationships and managing suppliers by having a finance facility in place to deal with the overhead for now.”