Small and medium sized enterprises (SMEs) in the UK spend an average of £1m each on business expenditures every year, and Londoners splashed the most cash of any region, new research suggests.
Larger SME firms, or those with about 50 employees or more, spent an average of £3m every year on buying goods and services for their companies, while micro businesses, or those with one to nine employees, spent £225,379 per year on average, research published today by American Express found.
The biggest costs on businesses' annual shopping bills were hiring new staff (24 per cent), paying suppliers (20 per cent) and investing in technology (19 per cent).
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The study, done in partnership with the Centre for Economics and Business Research, also found older SMEs were bigger spendthrifts than young companies.
Firms set up at least 15 years ago spent an average of £1,385,400 annually.
Business spending also varied by region. In London, where costs are higher, businesses spent closer to £2m a year on average.
“Running a business can be an expensive affair and as our research demonstrates, there are significant costs involved when building a business," said Jose Carvalho, senior vice-president at American Express.
"However businesses that have the ambition and drive to grow shouldn’t be deterred. By having a robust cash flow management system in place SMEs will have an essential tool to manage costs efficiently without impacting the running of the business, its staff and customers.”
Business costs by region
|UK region||Average annual SME business expenditure|
|Central (West Midlands, East Midlands and east of England)||£1,144,947|
|South (South East, South West)||£696,602|
|North (North East, North West, Yorkshire & Humberside)||£526,882|