Credit crunch crushes SME sales to six year low

SMALL firm sales expectations have fallen to a six-year low according to the Open University’s Small Enterprise Research Team (SERTeam).

Its recently published study shows that the knock-on effect of the credit squeeze as well as evaporating consumer confidence has hit small retailers the hardest and that the housing market slump means smaller construction firm order books are drying-up.
The quarterly SERTeam survey, drawing more than 800 responses in Q1, takes a closer look at regulation as well as reporting on performance and prospects. 

For the first time, the quarterly survey, which takes a close look at regulation as well as reporting on performance and prospects, drew on data supplied by Barclays Bank which indicated that the rate of small business formation has turned downwards.

More than 90% of respondents said they doubted that government understands small business well enough to regulate and nearly as many believed there was a lack of joined-up thinking across government departments.

Some 61% of firms reported that they were spending more time on regulations and paperwork than this time last year and only one in ten believed that the Government consulted well with business before introducing or changing regulations.

On average, small firms spent 5.4 hours per person per month on regulation compliance but the many self-employed who work alone spent nearly double that time (9.7 hours).

Professor Colin Gray, chair of SERTeam trustees, warned that analysts were seeing a noticeable slide in the economy.

“Worsening economic conditions appear to have fed through into a slowdown in the rate of new business starts and the only sectors expressing any optimism are agriculture and services where output and prices remain relatively strong,” he said.

Graham Ball, a partner in Castleberg Sports, sports and outdoor pursuit’s retailers in Settle, said that for small, family-run retail businesses keeping up with regulatory requirements as well as running the business led inevitably to owner managers working long and lonely hours.

“Once you’ve shut shop you have all the back-office jobs to attend to but you accept that as part and parcel of being your own boss,” he said.

“When times are good, and you can perhaps take on an extra member of staff, this situation is eased, but in tough trading conditions, as at present, you sometimes wonder if the diminishing returns are worth all the effort.”

He added: “While accepting that regulation is necessary, it is then particularly that you may feel a trifle frustrated about the time and other resources used up in compliance. Take VAT, for example; as tax collectors we are not merely unpaid, we have to pay our accountant for the privilege of so being.”