SMEs still suffering

More than a quarter of small and medium-sized businesses are ‘only just surviving’ or being forced to make cuts and rationalise operations, finds research. 24% say trading conditions are worse than a year ago, while 35% do not expect the UK economy to recover for at least three years, according to the latest quarterly Bibby Financial Services Business Factors Index.

Ed Rimmer, Bibby’s UK CEO says, “With murmurs of an impending second ‘credit crunch’ rife, UK businesses are still in for a bumpy ride.”

The Index, finds that nearly two thirds (59 per cent) of companies are planning on cutting costs, while half intend to manage suppliers more carefully to prepare for further economic challenges. Nearly a quarter of firms believe a loosening of lending criteria would most help to stimulate economic recovery, and more than three quarters (79 per cent) of businesses have not applied for any external funding in the past 12 months.

However, despite the perceived doom and gloom, the Q2 research shows 39 per cent of businesses across the UK are hopeful for the future, with a regional breakdown showing levels of optimism rising as high as 70 per cent in East Anglia and around the 50 per cent point for many areas.

APA recognises the pressure on small and medium enterprises and recommends that they continue to exercise extreme caution over spending and ensure that their cash flow management is better than ever before and, if possible, retain reserves as a war chest to flight their way out of trouble or spring board forward as pressures ease.

APA