Small Businesses Work Record Hours Just to Break Even
Two-thirds of small firms are working longer hours in the run up to Christmas than ever before, research has claimed, but many are not reaping the financial benefits.
In the survey of 1,000 small-business owners carried out by American Express and Costco, two thirds admitted that they were putting in longer working days to maximise sales and cash in on the festive period.
Most were feeling the pressure from this year’s tough trading conditions, the results indicated, with 69 per cent saying that the cost of doing business such as buying stock was higher now than this time last year. More than half said paying for stock upfront caused cashflow concerns.
The Forum of Private Business (FPB) said that many small firms were having to work “longer and harder” without necessarily reaping any benefits. “Even for firms that are going the extra mile, it’s very often just for standstill results,” said FPB spokesman Robert Downes.
“The vast majority of our members have seen the cost of doing business increase during 2011. Energy price rises have been reported by 94 per cent, 92 per cent have seen rises in transport costs and 82 per cent have seen hikes in the price of raw materials.
“Many have also had to absorb cost increases themselves rather than passing on to customers, so clearly this affects profit margins,” added Downes.
Chartered accountant Michael Ogilvie of OBC said that the key to festive profitability for small firms on a budget was “a mix of cost management, good pricing and successful promotion.”
“Too many firms discount unnecessarily at Christmas, thinking that this is what customers want. But the goal should be to encourage customers to buy more ― look at what makes an attractive bundle of goods or services for instance, or offer a special price for multi-buys.”
“Don’t ignore the importance of getting your message out there either ― whether it’s using e-marketing, local mail drops or SEO to boost your website rankings. The number one mistake that businesses make is waiting for customers to come to them, instead of proactively reaching your buyers.”