Half of all small companies are concerned about the impact of the rise in the minimum wage, which comes into effect this month.

A survey by the recruitment website hotrecruit.com has discovered that 49% of small firms are worried about the increase – and 5% think it could put them out of business completely.

The website quizzed 71 small business clients across a variety of sectors. Many feel the 30p hike – to give an hourly rate of £4.50 for adults and a 20p increase to £3.80 for 18-to-21-year-olds – will have an impact on business.

Harvey Sinclair, managing director of hotrecruit.com, said: “There is no dispute that we need to increase the minimum wage to maintain aspirations for the low- paid but unfortunately this will hit small business the hardest.”