Snapshot of a recession

PA05/09 A revealing snapshot of the effect of the downturn in the UK economy on the small business sector has been uncovered by an online survey produced by The University of Nottingham Institute for Enterprise and Innovation (UNIEI). Many SMEs are feeling the pinch, as the gap between business credit and debt widens, non-paying customers create concerns over cash flow and little help is forthcoming from banks despite recent cuts to interest rates, according to responses to the UK Business Barometer (UKBB) and its sister survey, the UK Business Advisers Barometer (UKBAB). The latest results of the survey, conducted in November 2008, show that more than three-quarters (77 per cent) of the 119 respondents questioned believed that the balance between business credit and debt has worsened over the previous quarter. A higher number of business advisers (88 per cent) also believed this to be the case. As the recession begins to bite, more and more businesses may be forced to abandon their targets of achieving net growth just to fight to survive. A large minority of small businesses (16 per cent) admitted in the survey that plans for growth were less of a priority. A further 60 per cent revealed, somewhat worryingly, that their business was owed more by customers than it owed to suppliers — a clear cause for concern when cash flow and credit lines are being squeezed.