UK SMEs need to focus on diversifying customer bases, business health study suggests

Businesses located in Hull, Liverpool and Blackburn are predicted to be hit hardest by a lack of consumer spending, a new report concludes.

Businesses located in Hull, Liverpool and Blackburn are predicted to be hit hardest by a lack of consumer spending, a new report concludes.

UK companies which are more vulnerable to changes in local markets by way of job losses, welfare cuts and constrained wages are primarily located in the North of England.

In a survey carried out by Centre for Cities: Blackburn, Liverpool and Hull are found to be the most at risk by this kind of local market drop.

The report provides a ‘health check’ of small and medium-sized businesses (SMEs) by evaluating cases on a city-by-city basis.

It finds that the health of the local market is one of the most important factors in determining the success of SMEs, and that two thirds of those types of businesses in some cities remain reliant on trading with customers on a local basis.

While Cambridge, Crawley, Reading, Aldershot and York are found to be the least at risk from this kind of economic impact: Sunderland and Middlesbrough join the three other Northern cities as those identified to be ‘most vulnerable’.

Alexandra Jones, chief executive of Centre for Cities, comments, ‘Government must recognise the importance of local economies to SME performance and resilience and ensure that local partners, including Local Enterprise Partnerships, have a clear role in delivering national business support policies.

‘High quality, evidence-based Local Growth Plans will be critical to helping UK cities navigate the bumpy road of recovery, while support from national organisations such as UKTI, as well as local partners will be vital to helping SMEs diversify their customer base and even move into exports.

Centre for Cities’ study finds that 99 per cent of businesses in cities are SMEs, providing half of all private sector jobs. It is calling on the government to prioritise policies which can support the smaller end of the market.

Amongst its recommendations are a simplification of the ‘confusing’ mix of business support and work with Local Enterprise Partnerships and a move towards more ‘effective ways’ of encouraging SMEs to access relevant support.

UKTI, Centre for Cities also says, should strengthen its local knowledge base and work with local partners and business representatives to foster an increase in understanding of how exporting can boost success.

Jason Woodford, CEO at digital marketing agency SiteVisibility, says, ‘It’s always an issue for any business to be over reliant on any one customer or group of customers, particularly if that’s the public sector as they should take steps to reduce that risk if it exists. 

‘Centre for Cities calls for Local Enterprise Partnerships to consider setting up “business growth hubs”. Whilst this suggestion seems sensible, they should not be relied upon. SME business owners who feel they are impacted as these findings suggest need to put a marketing and business plan in place to grow themselves to success; and don’t forget the internet offers a huge opportunity to reach new customers who aren’t necessarily local, In order to ride the crest of the economic wave, companies across the UK must be creative, innovative and more importantly get the basics right.’

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Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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