Small business costs are falling

The cost of running a small business dropped in the first quarter of the year, according to reports.

According to the More Than's quarterly business inflation guide, which measures a basket of the 20 most important items bought by small firms, running costs for small firms have dipped by 1.4 per cent over the first quarter of 2009. In particular labour, advertising, materials and vehicle costs all contributed to the fall.

Overall, costs in the first three months of this year were 0.6 per cent lower than the same period in 2008, with the recent falls offsetting rises seen in the last half of the year.Commenting on the findings, head of More Than Business Mike Bowman told the Press Association: "The fact that we're experiencing such sustained deflationary conditions demonstrates just how deep the recession has become in the UK. The volatility has made it very difficult to plan and invest, placing tremendous pressure on cash flows and managing stock and staffing levels."

Service orientated businesses are particularly likely to benefit from the drop in costs, as one of their main outgoings is labour.

APA believes every little helps and as a service business itself it is grateful for any savings although I believe that other peripheral costs (perhaps not embraced in More Than's survey) are negating the benefits. One of the greatest downsides is that debtors are talking longer to pay and the cost of the money to sustain these debtor days is rising. I would certainly like to hear from Members or readers who think their financial departments are jumping up and down at the news of savings.

Gareth