SMBs spend £200,000 on new tech each year

Average SMB business spend ranges from £250,000 to £3 million

Small and medium businesses spend about £1 million each on business expenditure each year, with 20 per cent of that going to technology, shows new research from American Express.

The study was conducted with the Centre for Economics and Business Research (CEBR). It found that SMB spend could range from more than £3 million, for SMBs with more than 50 employees, to £225,000 for ‘micro-businesses' with less than nine employees.

Payments to suppliers took a similar proportion of expenditure as technology purchases, while the largest cost was associated with hiring new staff: about a quarter of business expenses.

"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, SVP 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."

He added, "More than half of SMEs are using business revenue to finance company expenses, while a quarter using personal savings. We found just over one in ten (13 per cent) use business loans or credit cards."

American Express and CEBR also analysed location, which is key when it comes to business costs. Unsurprisingly, London was named as the most expensive place to do business in the UK, with costs rising above £1.8 million on average. Central England cost on average £1.1 million, while the South (£700,000) and North (£525,000) were the cheapest areas to operate in.

To ease strain on small business owners, American Express advised focusing on cashflow rather than profits; determining a breakeven point (when income exceeds expenses) early; and setting up payment terms with new customers.