Small Businesses Blame Supplier Inflation for Lower Profits

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Small business owners across the UK are struggling to maintain their profit margins in the face of supplier price inflation according to a recent survey by business broadband provider XLN.

Business owners are really struggling at the moment

17th June 2011, London. Small business owners across the UK are struggling to maintain their profit margins in the face of supplier price inflation according to a recent survey by business broadband provider XLN.

When asked to rate various factors affecting their business over the last six months, small businesses gave an average 3.6/10 score for their profitability and 3.85/10 for supplier price inflation. Overall business sentiment was low with business owners rating all factors affecting their business with an average 4.34/10.

When asked to look into the next 6 months, business owners showed increasing scepticism that they will be able to borrow to expand their businesses, with them rating the likely availability of bank overdrafts and loans as being a low 3.67/10. Business owners were slightly more upbeat on the prospect of increasing their sales over the upcoming 6 months, but the overall picture remaining poor with a low 4.29/10.

With many businesses struggling, the government came in for criticism for not providing enough support for small businesses, with particular criticism directed at the failure of government to provide transport at a good price. Overall the current UK government received a rating of just 2.93/10.

One particular government decision that seems to caused problems was the decision to back the royal wedding with a public holiday. When asked “What effect did the recent Royal Wedding Bank Holiday on 29th April have on your business's sales?” a massive 44% of small businesses said it decreased their sales compared with just 8.5% who said the break increased sales.

“Our research reveals that business owners are really struggling at the moment,” said James Wilson, Marketing Director of XLN Telecom, “A combination of price rises from their suppliers and a bleak outlook for bank borrowing leaves businesses unable to boost their profits by any means other than increasing their own prices. And with consumers having less ready cash, that looks like being a tall order.”

“The decision to make the Royal Wedding a public holiday was incredibly popular with the public but it seems that it has hit small business owners in the pocket,” added Wilson. “I hope the government will consult with small businesses before making further changes to the bank holiday schedule.”

For full results of the survey please see:

Additional information
For more information, interview opportunities or additional quotes, please contact:
Barney Jones            07713 629694
XLN Telecom

About Small Business Opinion Survey

Small Business Opinion is a survey conducted by small business telecoms provider XLN Telecom with a view to taking the temperature of small businesses in the UK. The survey is sent to members of our small business owners database who on completion of the survey are eligible upon completion to enter their e-mail address to receive a copy of the results and a chance to win John Lewis vouchers.

About XLN Telecom

XLN Telecom Ltd. was founded by Christian Nellemann in 2002. It is located in London, United Kingdom and provides a business phone line or business broadband connection to 130,000 customers. Deregulation of the UK Telecom’s industry has enabled XLN to offer an alternative phone service to BT™ at a considerably lower cost.

XLN is the fastest growing independent Telecom Service Provider in the UK focusing on the Small Business sector. The company is profitable and backed by a leading institutional investor.

XLN’s founder and CEO was first recognised as Ernst & Young’s Entrepreneur of the Year in 2006 for Technology and Communication, winning again in 2010. The Telecom Provider has also been a National Business Awards Finalist for 5 years: 2004, 2005, 2006, 2009 and 2010. In 2007 and 2008, XLN Telecom was ranked on the Sunday Times Tech Track 100 survey of the 100 fastest growing technology companies in the UK.

In 2011 XLN was listed as #6 in the Sunday Times Buyout Track 100 and #84 in the Sunday Times Profit Track. IN 2010 and 2011 XLN also won British Venture Capital Association (BVCA) awards for ‘Best Private Equity Backed Management Team’.

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Barney Jones
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