SMEs remain under pressure as fuel prices increase

petrol increase Source: Google Images

Small and medium-sized businesses (SMEs) are often hit the hardest during the periods of fuel price increases. This comes at a crucial time as SMEs are still trying to recover from the financial impact of Covid-19, coupled with lower economic growth.

As a result, the expected increase in the prices of diesel and petrol by about 66 and 57 cents per litre respectively, will have a negative impact on SMEs. This will be further exacerbated by the expected price increases in the general fuel levy and Road Accident Fund levy, coming into effect in April.

Therefore, it is essential for SMEs to make key decisions in order to sustain their business models as fuel costs impact their distribution costs, supply, overhead expenses, pricing of their products and services. Given that consumers are also having difficulty making ends meet these costs may need to be absorbed as they can’t be passed onto to their clients.

Businesses need to view these increases alongside the importance of cash flow management, actively manage how they can contain costs and seek opportunities to be resilient in response to the tough economic conditions.