7 out of 10 Firms Seek Face-to-face Advice

Small firms are turning to trusted sources for advice as the economic climate, cashflow and bad debt become their dominant problems according to the 100th Quarterly Survey of Small Business in Britain released today by The Open University Business School, association with Barclays Bank and the Association of Chartered Certified Accountants (ACCA).

Most (71%) want face-to-face contact for new advice and information and are turning to their accountants (55%) and business trading partners (51%) such as customers, stockists, and suppliers. Previous years saw an increase in the use of electronic media such as email (64%) and websites (62%). Use of hard copy publications like pamphlets, directories and guides has declined (down to 27%, from 54% in 2002 and 45% in 2007).

Professor Robin Jarvis, head of ACCA’s Small Business Policy Unit, says:

“In this digital age, it’s interesting to see that face to face contact is more important to SMEs than ever. Trust has been a massive issue during the economic crisis, so it is pleasing to see that small businesses are using a variety of sources to help them through the ups and downs of the economic cycle.”

Professor Colin Gray, Professor of Enterprise Development, The Open University Business School said:

“We have been monitoring the effects of the recession on small firms since before the ‘credit crunch’ started to raise its ugly head in the middle of 2007. In the second quarter of 2008, as the downturn was sliding into a full recession, we asked our survey respondents what counter-recession steps they were taking.”

“More than half were taking cuts in their own personal earnings and other cost cutting measures, including two in five of small firms laying-off staff. This was particularly severe among small hotels, restaurants, retailers, wholesalers and construction firms. Against that, more than 40% – especially providers of business and personal services and small manufacturers – took a more entrepreneurial approach and were actively seeking to move into new markets and lines of business. To do this effectively they need speedy access to reliable advice and information. Our current survey indicates a rapid growth in the use of fast electronic sources of information with an increased need for the reassurance of face-to-face contact”

Larger and more entrepreneurial small firms are making more use of a wider range of sources of advice and information, including government- funded services and business and trade associations.

Small builders, transport firms and wholesalers have slipped deeper into recession during 2009. The agriculture and fisheries sectors, small hotels, restaurants and small providers of education and health services reported net positive sales balances for the past year though small hotels and restaurants anticipate that sales will fall once again in the current quarter.

While small firms in the education, health and leisure sectors anticipate a net increase in staff the prospects for employment remain bleak. Most businesses are adopting a ‘wait and see’ approach with two-thirds (65%) reporting no change in their staffing levels and three-quarters (75%) anticipating no change in the immediate future. There were some signs in East Midlands, North West and London of firms cutting prices in order to boost sales.

As part of the 100th survey The Open University Business School is launching a free one day workshop Entrepreneurial Leading out of the Recession. The aim is to help business owners with the challenges identified in the survey. Taking place on the 28th January the workshop will explore what leadership means in a recessionary context, what actions and knowledge need to be fostered in small firms and what are the most effective ways of developing the right skills to manage successfully.

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