SMEs Best-Equipped to Cope With Recession

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Small businesses are better-equipped to survive recession than larger organisations, claims the Small Business Research Centre at Kingston University.

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The centre’s director of research Professor Robert Blackburn said:

“Small firms are generally much more flexible than large firms. They are more likely to be able to quickly reduce their costs and outflows, unlike the larger organisation which may have to undergo major structural adjustments to re-align its activities with a decline in market demand”.

“The ability of SMEs to make temporary changes, such as reducing the pay of the owner–managers, makes them more able to adapt to adverse market conditions”, according to Blackburn.

“Small firms are more resilient than some commentators would lead us to believe. However, there is no getting out of it,” he continued. “A recession does affect all businesses and small firms are not immune from this. It is the way in which they cope that makes them different.”

However, according to the British Chamber of Commerce (BCC), UK’s business sector is only months away from recession.

The BCC’s recent quarterly economic survey showed that confidence, employment expectations, home sales and orders and cash flow are all at lows not seen since the early 1990s recession. The services and manufacturing sectors are the worst hit, according to the statistics. Recent reports of similar nature have recently been mirrored by the national press.

BCC director General David Frost said:

“The Q2 results signal a menacing deterioration in UK prospects. We are now facing serious risks of recession. For the first time in many years, the vital results for domestic sales and orders, and for cash flow, have moved into negative territory for both manufacturing and services”

“The outlook is grim and we believe that the correction period is likely to be longer and nastier than anticipated,” he concluded.

The National Federation of Enterprise Agencies (NFEA) urged small businesses to focus on the dynamics of their business in preparation for the predicted economic change.

“Make sure you’ve got a firm grasp of your figures – your sales, your orders, your supplies, your cashflow – and be prepared to respond appropriately or seek advice if you see any changes,”

said NFEA chief executive George Derbyshire.

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