It seems everyday now another story comes out about 'credit crunch Britain', I personally feel it is doing the country no favours, it is whipping up fear in the consumer and making them spend less, a vicious circle which the government is finding difficult to break.
The latest news from the British Chamber of Commerce states the economic situation as "Frightening, ominous and truly awful", not exactly inspiring a positive outlook.
With the news 50 small businesses a day! are going bust, we need to be aware of what options and help is out there. We need to realise the businesses that are struggling are in the main reliant on financing from the banks for their day to day trading, and with their customers taking extended credit, this further exasperates the problem. The banks have stopped providing the lines of credit they provided in the past, basically throttling the company.
A plan to guarantee up to £20bn of loans to small businesses to help them survive the economic downturn is set to be unveiled later.
It is likely that in return for a fee, the state will in effect insure banks against firms defaulting on repayments.
To find more help from Business Link click here.
Business Link are a really useful government body, offering real help for all businesses, they also have a quick questionnaire to ascertain whether your company would qualify for the above mentioned loans.
I include below a cut and paste from the Federation of Small Businesses, which I felt was a really useful article, I found the section about Crime against Business particularly insightful, something that is affecting Lymm all too often.
Link to the FSB
Five steps to survival
As small businesses battle to survive the economic downturn, Andrew Moody reports on five key policy priorities highlighted by the FSB as a result of its major regular report into the opinions of UK business owners
Ian O'Donnell believes the Government needs to provide better support for small firms to help them survive the downturn. The managing director of two businesses in Meriden in the West Midlands, Realpoint Graphic Design and Realpoint Business Technology, says Business Link – the Government's business support network – is reasonably effective in providing help to startup businesses. But, he argues, it fails to support established businesses.
‘They are good at pointing you in the right direction when you don't know a lot. But when you are an established business looking to grow, you are likely to be faced with a business adviser who knows less than you do,' he says. ‘If the Government want to get businesses through the downturn it should target help at the businesses that want to grow.'
The whole subject of business support and finance is one of five policy areas highlighted in the FSB's 2008 Putting the Economy Back on Track report, the largest barometer of small business opinion in the UK. The other key areas are skills and training; transport; environment and information and communication technology; tackling crime against business; and allowing SME owners to achieve a work-life balance. Based on the report, the FSB has come up with a series of policy recommendations in each of these areas.
John Walker, the FSB's national policy chairman, says now is the time that small businesses most need help in order to get through the current downturn.
‘The British economy is going through difficult times and small firms are feeling the downturn. Over the past few months, the FSB has managed to put small business issues right at the top of the Government's agenda.
‘Putting the Economy Back on Track highlights where help should be targeted most. Small businesses need available and affordable credit and they also need government-funded business support aimed at where the real needs are.
‘Support is required in other key areas. This includes investment in skills and training, infrastructure, tackling crime against business and an end to over-burdensome regulation which results in many small business owners having to work longer hours than they would otherwise need to.'
Step 1: - Business support and finance
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Business Link and other business support services around the UK need to improve their act if they are to provide the necessary help to small businesses during the downturn.
Just over a quarter (27.5 per cent) of respondents in the survey said they used government-funded business support such as Business Link, much of which was advice for start-ups.
It also showed that 50 per cent of small businesses were vulnerable to the current credit squeeze in that they were heavily dependant on banks for funding. Some 29.4 per cent relied on a bank overdraft and 14.4 per cent on a secured bank loan.
The FSB believes a series of measures are now vital to help businesses through the current economic situation. It wants the Government to set up a £1 billion Small Business Survival Fund to take over from the Small Firms Loan Guarantee scheme to distribute funds from the European Investment Bank. This would be a stop-gap measure for small businesses to access finance over the next six months. Late payment legislation should also be strengthened so that firms which try and regularly pay late can be named and shamed.
The FSB also wants to see major improvements in government-funded business support such as Business Link. It wants them staffed by advisers with real expertise.
‘They should not be focused on start-ups as they are now, but offer more help to established businesses which need support to grow their businesses at key stages of their development,' says Ash Farag, the FSB's financial affairs chairman.
David Caro runs Birmingham-based Qualplast, which makes flock-coated interiors for vehicle glove departments. The 57-year-old, a veteran of two major recessions, says banks need to be held to account.
‘Banks should not be allowed to get away with increasing overdraft rates when they have already agreed terms with a business. Businesses need to know where they stand.'
He also argues that business support agencies should be staffed by people who have been through the mill before. ‘The best people to give advice on how to get through a downturn are those with experience of previous downturns, who are able to offer considered advice.'
Step 2: - Transport, environment and ICT
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The FSB is urging the Government to take measures to ease road congestion to help small businesses through the downturn. In the survey, small businesses in London lost on average 14.9 hours per week as a result of congestion.
The problem was also bad in many areas with businesses in the West Midlands losing just under eight hours and 6.1 hours in both the north east and Wales. The problem was often worse on rural roads and this is where the FSB believes the Government should focus investment. It should also make more money available for public transport solutions.
John Mills, who runs Windmill IT, a web design and marketing company based at Alcester in Warwickshire, believes his business would benefit from a tram system linking market towns to major cities such as Birmingham.
‘Traffic congestion at rush hour is so great it can take half the morning to get into Birmingham. If we had a tram system linking the smaller towns with the city, it would be quick and efficient and it would be a major asset to small businesses.'
The report also highlighted that smaller firms had taken fewer green measures than larger firms. The FSB wants the Government to offer more financial incentives so that SMEs adopt these measures. It also wants small firms to benefit from greater investment in technical innovation.
The report showed that SMEs were being hampered in the current economic climate because they weren't able to take full advantage of information technology.
Just over a quarter (28 per cent) did not have a website and some 37 per cent did not have access to fast broadband, particularly in rural areas. The FSB is urging broadband providers to offer a uniform service around the country.
Naomi Tarry, who runs bestofsuffolk.co.uk, a holiday rental business based at Badingham in Suffolk, believes that if small businesses want to invest in IT to reach new markets during a downturn, they need to make it count.
‘It is no good just putting up a website and expecting it to bring in business on its own. To make it work, you have got to spend a lot of time and energy getting things right.'
She launched the business with husband Alex two years ago. ‘A lot of other companies had brochures but we felt most people did not want to flick through a paper product over a cup of coffee anymore and preferred to surf the web.'
They invested heavily in a website and have an ongoing relationship with their designer to ensure it is continually updated. ‘We always need to ensure that our site appears at the top or near the top of page one of any search engine.'
Step 3: - Skills and training
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If small businesses are to get through the downturn, they as always will rely heavily on their people to do so. The report highlights that small businesses are concerned about the increasing lack of basic numeracy and literacy skills of potential recruits.
Growth-orientated companies, in particular, said this was a major barrier to their development.
The FSB is calling for the Government to focus on training and preparing the 10-20 age group to work in small businesses, which employ 58 per cent of the private sector workforce. It wants to see more focus on enterprise modules in schools, work experience options in SMEs and the message given to graduates that working in the small business sector offers a worthwhile career.
The FSB is also campaigning for greater SME representation at board level on the UK's 25 Sector Skills Councils (SSCs). It wants to see official recognition of the often invaluable informal training given to employees by many small businesses.
‘We would like to see much of this training given the same value as recognised paper qualifications, because people who work in small businesses often get the best on-the-job training available anywhere,' says Colin Willman, chair of the FSB's education, skills and business support committee.
Billie Carder, who runs The Spread Eagle in Erpingham, a pub and restaurant near Cromer, in North Norfolk, has invested heavily in training. While many pubs are being seriously affected by the downturn, she has trained her six staff in all aspects of the licensed trade.
This, combined with major investment in new facilities, resulted in a near trebling of her turnover in October, compared with the same month last year.
‘The training means that any one of my staff now can take charge of the pub in my absence,' she says. ‘Many businesses in my sector have rolled over and died and moaned about the smoking ban. I actually introduced a smoking ban six months early and have invested in all aspects of the business. Having a well-trained and competent workforce is vital.'
Step 4: - Crime against business
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The last thing a small business battling the downturn needs is to be a victim of crime. One of the most unsettling statistics in the survey is that 64 per cent of businesses have been a victim of crime over the past 12 months, a rise of seven per cent from the 57 per cent the last time the survey was carried out in 2006.
The average cost to each business of this crime is £13,354. Vandalism, vehicle damage, threatening behaviour, graffiti, shoplifting and burglary are all on the up.
Much crime against business goes unreported and, as a result, is not recorded in official figures. Two-thirds of small businesses were not aware of major initiatives such as neighbourhood policing units.
Mike Cherry, chairman of the FSB's home affairs committee, says there now needs to be an official definition of crime against business. ‘Police forces must recognise crimes against business, which make up 20 per cent of all recorded crime. Strategies and targets for its reduction should also be included in every local policing plan.'
Cherry is urging local authorities to take up the battle on crime against business by making it a priority for Crime and Disorder Reduction Partnerships or other local police authorities at a local level. ‘These partnerships must engage directly with the business community to factor their concerns into local strategies to tackle crime.'
Step 5: - Work-life balance
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Small businesses do not just have their business on the line surviving the current downturn but their entire livelihood.
More than a third (35.7 per cent) of SME owners would lose their home if their business went under. Just over one in seven (13.2 per cent) would lose everything they own.
So it was not surprising that, according to the research, 68 per cent were working more than 46 hours a week in their business. The research showed that many SME owners were working late into the night to cope with red tape.
Walker at the FSB says that, when it comes to small business owners, work-life balance is often ignored. ‘It is seen as an issue for employees but not for those running their own businesses,' he says.
‘Entrepreneurs who start their own business, provide employment opportunities and grow the economy are rarely thought of as people who have risked their homes, and work long hours to do so.'
Becoming self employed and running a business from home does offer advantages in terms of the work-life balance. Alan Tyrell, chairman of the FSB's employment committee, says it offers an opportunity for people with disabilities, in particular.
‘Self-employment should be seriously considered by the Government as part of welfare reform in the future.'
Charlie Dalton is an FSB member benefiting during the current downturn from people wanting the flexibility to work from home. He launched Mini Offices, based in Ipswich in Suffolk this year, renting out offices that can be assembled in people's gardens from as little as £49 a month.
‘We have had a lot of interest from people who have worked in the City and have wanted to downshift into self-employment. Our offices are far cheaper than commercial premises, but a much better solution than working in a corner of the living room or under the stairs. Unlike in a high street office, you have only a 10-second walk indoors to make a coffee.'
While the focus so far during the downturn has been on the crisis of credit, the report has indicated that small firms need help across a number of key areas also in order for them to get through these difficult times.
Walker at the FSB says the report has shed light on many areas of weakness that need addressing urgently. ‘Although it has been right to give a high priority to the financial crisis, small firms need support in many other areas so they can emerge successful once the current economic troubles are behind us.'
Five tips for survival in an economic downturn
By Doug Richard, entrepreneur and Dragons' Den panellist
www.venturenavigator.co.uk
1 CASH IS KING
Manage cash – if you're out of cash and out of credit, you're out of business.
2 COLLECT WITH PASSION
Manage receivables aggressively. Don't keep extending credit.
3 DON'T DEPEND ON ANYONE
Keep a close eye on your suppliers' performance, and have alternatives.
4 YOU CAN ALWAYS CUT MORE
You can forecast expenses, you can't forecast revenue. Look for places to cut expenses.
5 TALK TO YOUR LENDERS
If you have debt financing, stay in communication with your creditors. Don't wait until it's too late before speaking with your lender.
Taken from the Fsb website, link above.
Whether you like it or not we are all 'in the same boat', if a business fails in Lymm we will all be at least indirectly affected, if only by the negative impact created.
As a group Lymm Traders may be able to offer some support if we work together.
Stay strong