London Businesses Facing an Invisible Storm
Why the “Hidden Tax” is Turning Profits Into Puddles
Hey Londoners, if you’ve been running your own shop, cafe, or tech startup, you’re probably feeling that sneaky lift in everyday costs. It’s not a new bill; it’s the old friend inflation – the invisible tax that’s been ticking away at every company’s bottom line.
The Red‑Flag Signs Is the Big Red Peep Show
- Input costs keep climbing, while wages are also getting a bump.
- The government plans to raise NICs by 15% and the minimum wage by 6.7%. That’s a potential hit of over £25.7 billion in taxes for almost one million employers.
- Companies that have absorbed price hikes without tightening up efficiency or lifting prices are about to stumble.
Stephen Grant on How the Cost of Business is Collapsing
London‑Bridge‑based partner Stephen Grant at Azets says, “Inflation is like a hidden tax. It’s hurting local businesses, especially those that haven’t yet tweaked their operations.” He explains that while the headline inflation sits at 3.5%, that figure is a shadow over the 11.1% peak in October 2022, caused by pandemic supply hiccups and energy screams after Russia’s invasion of Ukraine.
Things to Watch Out For
- Companies that’ve already absorbed input price and pay rise spikes but haven’t improved efficiency risk losing money faster than they can keep up.
- Doing “business as usual” is safe in calm seas but disastrous in a fast, rough economy.
- With about 220,000 SMEs in the UK, a small number wield the power to crash a big “restaurant” or “retail” business if they don’t keep tabs on their cost curves.
How Much Extra Do We Need to Stay Afloat?
Take an SME with up to 49 staff that made £3.5 million last year. To even break even now, they’d need £4.5 million – a jump of almost £970,000 over six years. That’s a whopping 28% inflation bump. If profit margins were already thin, a shortfall of this magnitude can push a business straight into the red – maybe even insolvency.
Azets’ “Boost” Programme: Small Gains, Big Wins
Azets doesn’t just hand out numbers; they’ve built a Boost programme that spots 13 key success levers: growth, sales, people, strategy, profit, and more. They offer diagnostics, workshops, and real‑time help. Clients’ stories speak volumes:
- One business Doubled turnover in 36 months.
- Another Cut profits by 100% in 24 months.
- One owner cut their work week by two days while up‑scaling revenue.
What the British Chambers of Commerce Say
They’re seeing that ¾ of surveyed firms are already raising prices to keep pace. If you’re in that bandwagon, check in with Azets’ health checks, and you might spot the subtle leaks that are stifling your business’ future.
Let’s Wrap It Up
Inflation’s creeping up, NICs are climbing, and the minimum wage’s got a scalar. The last thing your business needs is an unplanned trip to the “bankruptcy blues.” Keep an eye on your efficiency, review your pricing, and perhaps, give yourself a boost with a program that looks for those tiny gaps that can turn into big gains.
