‘Energy costs could be the tipping point’: UK small businesses pushed to the brink | Small business

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“The future is far from certain,” says Julian Pariera, owner of Beauchamp Laundry Services in Birmingham. “I am extremely concerned with the way things are going. “

Pariera is one of thousands of small business owners across the UK who will bear the brunt of the national energy crisis which threatens to lead the UK to a cost of living catastrophe over the next year or so. Before next winter, it will have to renegotiate an energy deal to run the washers and dryers its customers depend on after a record spike in energy market prices.

“We set our energy prices for up to five years, and every time we renew a deal, it seems to double. This time around, I won’t be surprised if our energy costs quadruple. It’s madness, ”he says. “These costs cannot be reflected in our prices, because if we increased our prices by that much, our customers would not be able to afford it. So the question I have to ask myself is how can we manage while protecting our customers?

“The government is talking about getting business back on track after Covid – and I’m not saying they’re doing a bad job – but with these cost pressures, it’s just ridiculous. We will continue one way or another because this company has been around for 30 years – we are established – but if we were just starting we wouldn’t get there, ”says Pariera.

Many customers visit Beauchamp Laundry Services because it’s more affordable than running their clothes dryer at home, for now.
Photograph: Jennifer Wilson / Alamy

For now, it’s even more affordable for many Beauchamp Laundry customers to bring wet clothes and laundry to dry in the dryer during the winter than to run their own tumble dryer at home, explains. Bet. But at some point next year, he may have to adjust his dryers to deliver fewer minutes for every pound spent.

These concerns are shared by owners of small businesses across the country, which employ nearly 13 million people and have a turnover of £ 1.6 billion each year. The Federation of Small Businesses has warned that energy costs are the primary concern of its members and could prove to be “an existential threat”, especially to the fragile end of the small business sectors that have been hit hardest. affected by Covid-19 restrictions.

Ibrahim Dogus, owner of three restaurants near the London Eye, says a “vicious cycle” of rising costs and falling revenues rampant in the hospitality industry means that even long-standing restaurants in prime locations have struggling to get affordable energy deals. Many vendors refuse to offer contracts to restaurants without a hefty security deposit, or charge exorbitant prices to guard against the risk they might run, he says.

“Before the recent price hike I would pay between £ 2,500 and £ 3,000 a month for energy in a restaurant. But my last bill for November was £ 5,600. At the same time, the turnover fell between 10 and 15% compared to what it was. Before the pandemic, we could serve 600 people; these days it’s closer to 60. But our costs keep going up. We are quite worried, ”he said.

Dogus has already reduced its workforce from 60 to 25, used government support programs, and negotiated payment plans to manage debt it owes its owners and pay corporate tariffs. But energy companies are the exception, he says, and that could prove the difference between whether or not his chain will survive.

“Energy companies are not at all interested in helping. If you don’t pay in full for a few months, someone will come and turn off your lights. It doesn’t matter that you can’t pay them if you can’t serve the customers. It would be over, ”he said.

“It’s a very difficult time for small businesses. There was the Brexit, there was the Covid. But on top of everything else, energy costs could be the breaking point, ”he says.

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