The majority of senior decision makers in British small and medium-sized enterprises (SMEs) say they are concerned about the current economic climate, with three in five businesses not confident that the economy will improve over the next year.
This anxiety is highest among SME managers in the construction industry (93 per cent), closely followed by manufacturing businesses (88 per cent) and retailers (85 per cent), according to a survey of 500 senior SME decision makers by insurer Zurich.
Such pressures have culminated in more than one in ten SMEs (13 per cent) stating that they have considered closing down their business in the last quarter – up from 11 per cent in the quarter before.
The figure rises to 25 per cent for those in the construction industry, against 15 per cent for the quarter before.
Consequently, more than half of SMEs (53 per cent) feel that the current business environment is more risky than this time last year, compared to only 11 per cent who believe the level of risk has fallen.
The much hoped-for London 2012 ‘business bounce’ didn’t materialise with more than three quarters (79 per cent) of respondents saying that the Games had no impact on their business, and only 6 per cent of respondents agreeing that they had a positive impact.
Some 63 per cent of SMEs are concerned about current revenue and income stream generation today, with one in six (15 per cent) having had to reduce staff numbers in the last financial quarter.
Almost a third say they have had to reduce prices in the last quarter, with 63 per cent saying that management in their company is currently concerned about profit and margin levels.
In response to hardship, SMEs are fighting back with innovative measures, with more than half (56 per cent) saying that they have expanded business activity to target new customers.
Moreover, 31 per cent of respondents are seeking to diversify their business offering through methods such as expanded product range and services.
When asked to list three opportunities for their business, 23 per cent of respondents say web trading, 22 per cent business innovation such as teleworking, and 19 per cent access and expansion to overseas markets and customers.
Richard Coleman, director of SME at Zurich says, ‘British SMEs are clearly facing a huge amount of risk in the current climate, with narrowing profit margins, tighter operating environments and uncertain revenue streams.
‘However, the fact that the majority have expanded their business activity to target new customers is reassuring. This demonstrates the agility of British SMEs; they are taking forward their own measures and diversifying their business to navigate through this difficult climate.’
