It turns out that SMEs are leading the way on cost cutting, according to new research. Applegate PRO’s survey, which questioned 726 SME senior decision makers, revealed that they are in fact savvier shoppers than larger businesses.
In fact, SMEs are between 50% and 100% more likely to shop around and compare prices on everyday items than their larger counterparts. The research suggests the savvy-buying, cost-conscious nature of very small businesses seems to get lost as businesses grow – even though the challenge of managing fixed costs becomes a bigger issue.
A more detailed look at the research shows that SMEs spend more time on comparing costs for everyday businesses expenses, but it’s time well spent, as the savings are considerable. For instance, 79% of small businesses shopped around for printer cartridges, compared with 33% of medium size business, while the figure for batteries is 27% compared to 11%.
‘Managing costs essential’
Stuart Brocklehurst, CEO of Applegate Marketplace commented: “In a volatile or uncertain market, managing costs is essential for the majority of UK businesses. It is a concern that small businesses seem to be growing out of savvy buying as their business grows – rather than growing into it. As these businesses grow, patience to obtain the best value deteriorates and maverick spend can increase.
“Larger businesses have procurement teams that handle purchasing, but for smaller and medium sized firms, many have to weigh up the value from shopping around versus the time and cost involved in doing this.”
Ironically, SMEs have been boosted by changes to the government’s own spending policies. It spent more than a quarter of its budget on providing contracts to SMEs in 2014-15.