Costs associated with running a small or medium sized business have risen almost 12% higher in the past 10 years than the Consumer Price Index (CPI), the measurement for UK inflation.
On average, increases in SMEs’ costs between 2015 and 2025 outpaced CPI by 11.75 percentage points, according to the research by Dojo.
Hospitality was the sector most impacted with an overall 62% increase in costs.
Among hospitality sub-sectors, catering businesses have faced the steepest rise, with materials and supplies costs up 113% and transportation costs rising 57%.
Hotels have seen costs rise 52%, while pubs and bars have experienced a 48% increase.
Energy costs have risen sharply across all sectors, increasing 87% on average over the past decade, with some sectors experiencing far steeper rises.
Businesses with heavy digital infrastructure have been particularly affected, with web design agencies seeing electricity costs increase by up to 130%.
Insurance and licensing costs have also climbed significantly, the report said.
They rose 76% on average, with high-risk sectors such as agricultural contracting and fisheries seeing insurance premiums increasing by more than 120%, driven by environmental risk and regulatory requirements.
Charlie Ashworth, head of research and insights at Dojo, said:
“While operating costs have risen significantly over the past decade, with the right insight into their cost structure, businesses can be better equipped to respond to these pressures.
“For business owners, the opportunity lies in control and efficiency. With labour, energy, insurance and technology costs all contributing to long-term structural change, understanding where your exposure sits is now a strategic advantage. Reviewing supplier contracts, improving operational efficiency, reducing unnecessary overheads, and optimising payment systems can all help protect margins in a higher-cost environment.
“With increases of this scale, businesses must take a more strategic approach to operations and managing their supplies. Understanding the supply chain is critical, and business owners should really look into how much they pay per item and whether there are more competitive suppliers available without compromising quality.
“Another option is to investigate how usage can be reduced, or processes improved to minimise waste. In times of sustained inflation, careful supply management can make a meaningful difference to overall profitability.
“Businesses that regularly assess their operating model, adapt pricing strategies where possible, and invest in tools that streamline transactions and reduce friction are often better positioned to absorb cost pressures without compromising service or growth.”