Fall in demand more of a problem than lack of credit say SMEs
SMEs are citing the fall in customer demand rather than no access to finance as the biggest issue of 2009, according to findings from the Quarterly Survey of Small Business in Britain.
The survey, which is published by the Open University Business School and supported by the Association of Chartered Certified Accountants (ACCA) and Barclays Bank, showed that slowing demand is now the top concern despite frustrations over availability of credit.
Nearly 65% of of SMEs said falling sales was an issue compared to 25% who indicated access to finance.
A total of 14% said they’d had problems with suppliers and obtaining trade credit.
When it comes to staff 13% admitted to having shed key staff or dealing with employees morale problems.
SMEs in Scotland have fared slightly better in the downturn with only 56% saying they have experienced a fall in demand.
The North East and North West dipped slightly from the national average at 62% followed by Wales at 65% and a massive 75% in the West Midlands.
Business in East Anglia have also experienced a fall in demand, with 71% saying this was had impacted on them.
Among other effects of the downturn, the most commonly mentioned was the effect on cashflow, with some customers delaying payment of their bills.
The previous quarter’s findings at the end of 2008 showed that small firms are usually owed more by their customers than they owe to their suppliers.
Professor Robin Jarvis, head of ACCA’s small business unit, said: “Compared to the 1991 recession, businesses are now much more concerned about falling demand and are relatively less concerned about the availability of finance.
“Therefore the Government should primarily focus its efforts on stimulating consumer demand and this is reinforced by the latest figures from the BBA. Figures for March show an improving picture with a big rise in deposits and term lending.”
