Small business costs are still rising: Here’s how to manage them

In recent years, small businesses have faced increased financial pressures with energy bills, staffing costs, business rates and tax burdens all rising. In February 2026, a report by the House of Commons Business and Trade Committee found these pressures comparable to the Covid-19 pandemic for small business owners. 

April brings price rises including energy bills, the National Minimum Wage and business rates. Additionally, the Employment Rights Act will affect many small business owners with things like changes to statutory sick pay and paternity leave. You can read more about these changes in our recent blog. 

To help mitigate the impact of rising costs on your small business, here are three practical tips.

1. Audit your finances and improve planning

Faced with increasing costs, the first thing to do is take stock of your current financial situation. Audit your existing accounts to identify unnecessary expenses or areas of the business where you could streamline operations, reduce waste or optimise resource allocation. 

It may be that you’re waiting on a lot of outstanding invoices, which is negatively impacting your cash flow. If so, reassess your invoicing process to make it as easy as possible for customers to pay you. You could also introduce late payment fees or discounts for upfront payments. 

Find out how to get paid on time here. 

Now would also be a good time to make a contingency plan to help build your financial resilience, mitigate risks and speed up recovery. 

You can find a step-by-step guide on how to create a contingency plan here.

2. Reduce business costs

Once you’ve established your current financial position, next look for areas where you can make savings. Look for the easy wins first, such as going paperless to reduce printing costs or improving your energy efficiency to cut energy bills.  

Many suppliers will be facing similar financial pressures. If you’ve built a long-term relationship, they may be willing to negotiate on payment terms to keep your business. Reach out to try to find an arrangement that works for both of you, whether that’s a longer payment term or a discount if you buy in bulk or pay upfront. Alternatively, you may be able to source a cheaper supplier. 

If you can switch, use a comparison website to see if you can change your utility provider, or get in touch with your current provider to ask what help is available. 

Find more tips on reducing business costs here.

3. Revise your pricing strategy

Take a close look at your current costs to see whether your pricing still makes sense based on your increased expenditure.

If you do need to raise prices, be open about it and let your customers know why changes are needed. Communicate price increases clearly and fairly to keep your buyers' trust and avoid surprises. If you can, making small increases over time rather than a sharp one-off rise will be better received. 

How Funding Circle Can Help

At Funding Circle we offer a variety of products that can help small businesses deal with rising costs, from business loans to short-term lending.

Funding Circle business loans

Borrow from £10,000 to £750,000 over up to 6 years. All loans are fixed rate and come with no early settlement fees. 

Asset finance

Borrow up to £5 million to fund new equipment, vehicles, machinery or other assets through our partners.

FlexiPay

Spread the cost of business bills, invoices and more over 3 months with a flexible line of credit of £1,000 to £250,000.

Head to our website to find out which product might be best for you and your business.

02/03/26: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.