Resilient SMEs expanding despite Credit Crunch
More than half of small–business owners have no plans to curb their growth or avoid employing new staff because of the economic downturn, according to insurance firm Hiscox.
The Hiscox survey of 350 UK business owners found 52 per cent were not planning to stop their plans to expand.
Hiscox UK underwriting manager, John Heaney said;
“At a time when big firms are announcing profit warnings, refinancing and job losses, small–business owners are bucking the trend,” said Hiscox UK underwriting manager, John Heaney. “It’s encouraging to see businesses remain positive in the downturn.”
However, Heaney also cautioned against over–optimism in a difficult market.
“There are pluses – it might be a good time to negotiate on property, for example – but generally, businesses need to watch their credit management,” he said.
“Even if they are booming, their customers might not be,” added Heaney. “Similarly, being over–dependent on one large customer or dealing with lots of relatively new businesses when the economy is a bit uncertain could make an enterprise vulnerable.”
National Federation of Enterprise Agencies (NFEA) chief executive George Derbyshire agreed that small firms need to tread carefully when expanding in response to the credit crunch.
“There are always risks when developing a business, but small businesses need to think through the risks of expansion right up front, then they can plan to minimise them,” he said.
“The biggest risks are that they’ll lose money or the reputation of their business that they’ve worked so hard to build up – so they need to make sure they know their market, their product and the demand, as well as the costs, resources and effort that will need to be invested,” added Derbyshire.
“We would recommend that any small business that’s looking to expand should seek advice, but if a business is built on solid foundations, owners shouldn’t have anything to worry about.”
The Hiscox survey also revealed that the majority of SMEs in Germany, France and Holland were continuing to expand. The research found small firms in the US were the most optimistic, with 69 per cent stating they will continue to expand their business, even in the economic current climate.
For more information on planning business growth visit the Grow your business section of the Business Link website