Small businesses have seen costs increase by three times the rate of inflation.
This is according to a new survey from the Forum of Private Business (FPB), which asked small business owners which factors were preventing them growing their firms.
The survey found that energy costs were the most significant outgoing for 70 per cent of respondents, with raw materials and staff costs both at 65 per cent.
More than a quarter said they wanted to see a reduction in the cost of red tape, while one in five called for stronger legal powers to fight late payment. Seven per cent said they wanted improved access to bank finance.
In a separate survey earlier this year, the FPB reported that 94 per cent of businesses have seen an overall increase in costs. Some 87 per cent said they had experienced a rise in energy costs, 83 per cent in transport costs, and 78 per cent in marketing.
Meanwhile in that survey just two in ten said they were able to pass cost increases on in full to customers.
FPB chief executive Phil Orford said: “The economic outlook continues to improve but costs still remain an issue for our members.
“This is a timely reminder that despite all the talk of a need for above-inflation wage rises, businesses continue to feel the strain of rising costs. With the auto enrolment of staff into pension schemes just around the corner, the affordability of significant wage rises coupled with increased pension contributions will be called into doubt.”