SME sector hit by costs and finance shortage double whammy

SMALL firms in Yorkshire and Humber are facing a “double whammy” of rising costs and loss of customers as the economic crisis bites, according to new research from BT.

More than half of the businesses interviewed (52%) reported worsening trading conditions during the current downturn compared with just 9% who reported seeing an improvement.

And it appears that the region’s firms are among the worst affected in the UK by rising costs with around 61% reported difficulties compared to a national figure of 57%.

However, they bettered the national average for keeping customers (51%) by 2%.

But it is finance that is dominating issues according to the State of the Small Business Nation 2008 survey.

After rising costs,  finance, tax and VAT (42%) and legislation and red tape (41%) are seen to be the main barriers to growth.

Increasing turnover (23%) is the main priority during the slowdown with winning new business next (16%).

Technology is shown to be playing a key role in the business world with 81% of UK firms saying it has a positive impact on their company.

A third said it had enabled them to reach new audiences and had helped increase productivity.

The results were unveiled today at the start of BT’s Small Business Week, which will see a week long series of events being run up and down the country to help small firms survive the current financial crisis long into the future.

Bill Murphy, managing director of BT Business, said: “This growing sector continues to be dynamic and energising, but more than ever we need to ensure the right resources and structures are in place to support Britain’s small business engine room during these more challenging times.

“The aim of Small Business Week is to make entrepreneurs aware of the expert support and resources that are out there.

“We need to help as many businesses as we can to best meet the current challenges so they are ready for the upturn when it comes.”

Further opportunities from BT Business will include the chance to win free start-up grants, consultancy advice on responsible business practices and mentoring sessions with Dragon’s Den business tycoon, Peter Jones, and with BT’s own senior executives as the company launches its own small business mentoring programme.
 
Small Business Week 2008 brings together a range of small businesses with BT Business, the British Chambers of Commerce (BCC), everywoman, Business Link, NatWest and Growing Business. 

It will tackle issues such as the economic climate, home and flexible working, responsible business practices, mentoring, innovation and winning and retaining business.
 
For full details about Small Business Week 2008 and the resources and advice available visit www.sbw08.co.uk

Small and medium enterprises now account for more than half of the UK’s private sector employment and more than half a £1,653bn turnover.