Sunday, 4 January 2009

38% of small businesses say they won't survive 2009

An incredible 38% of small businesses predict that they will not survive through to the end of 2009, according to an article in today's Financial Mail on Sunday.

Given that there are something like 4 million small businesses in Britain, that's something like 1.5 million businesses which may go under - with the knock on effect of redundancies and creditors being left unpaid.

As I've said elsewhere on this Blog, this country's economy is in serious trouble.

What the above does mean is that there is also tremendous opportunity - in the small business sector - either to help those ailing businesses or to assist the failed entrepreneurs phoenix themselves into new ventures.

Meantime, back to basics business rules now apply. Be careful who you give credit to. Defend cashflow. Adapt your offering to ensure it is still what customers want. And become as flexible as possible so you can move quickly to cut costs if you need to.

Time to batten down the hatches methinks - it's going to be a tough year, but also one of great opportunity for those well prepared to weather the storm.

27 comments:

Bletch said...

Rachel I agree there is vast oppurtunity, I own an IT company and we have grown more in the last 12 months than at anytime in the past 7 years.

Anonymous said...

Yes it is time to batten down the hatches, and we have been over the last couple of months, and yes unfortunately we have made 2 of our staff redundant.
But I am sure with the un-conditional help and inspiration from the likes of you and others, ie; Million Impossible, we can all survive this forthcoming year. I think a lot of it is to do with a positive attitude, and yes, I appreciate that it hard in today's climate, but we must all try have a positive approach and truly desire in our hearts success.
I myself have bad days as do we all, but to think negatively DOES NOT help the situation.
It is now time to go out, and 'gang up' all those small businesses and help each other by way of working TOGETHER, so as to keep each and every small business trading.

Anonymous said...

Good God, another one looks to be going, come on Gordon, do something, or there will be nothing left, not even a Government at this rate as you won't have anyone to govern.

"Waterford Wedgwood, the maker of china and glassware, found itself close to bankruptcy on Monday after failing to secure a buyer amid a global economic slowdown, placing at risk thousands of jobs".

Anonymous said...

Lies, damned lies and statistics...

The same report suggests that 200,000 businesses may fold in 2009, which is actually about 5% of the total. Even The Sunday Times got this wrong, thinking that one in twenty equates to 20% - doh!

Clearly a number of businesses are going to fail and that's a trajedy for the individuals concerned. However, the vast majority of businesses will survive and a number will prosper.

C

Mr A Dragon said...

OMG! A post about actual business, am I dreaming?!

And actually, some sound advice from Rachel..

I would say, that now is the time to drive our businesses forward (in a controlled, intellegient way).

We have a plan of developments for 2009 and the recession isnt going to get in the way of those..

Why?

Because, there will be people who are still buying, what we all have to do is to make sure that they buy from us.

A point I would add, is if you are going to spend the money, ensure your spending it on the right things - do some research, talk to your customers.

For example, use Survey Monkey and it will cost you next to nothing, but may give you that golden nugget of information that will enable you to emerge from this recession, stronger!

Anonymous said...

I think that anyone who can survive this recession/credit crunch, and come out on the other side will deff' make, or stand to make vast amounts of money, and of course be much stronger, particuarly those small business'it is just a matter of getting through it, which we all know will not be easy.
But now is the time for those small business' to unite and fight for survival together.

Anonymous said...

Even if 2009 is looking problematic for many businesses, I am sceptical of the survey 'findings' (by Financial Mail and This is Money) and feel that they may be unduly pessimistic.

What was the sample size ? Was the sample reasonably representative or was it materially skewed ? What questions were asked of respondents ?

Regards,

Dave.

Anonymous said...

As I understand it the survey was conducted by the Forum of Private Businesses, whoever they are. I have just conducted a survey of my own and discovered that 100% of small businesses reckon they will probably be ignoring biased and unrepresentative surveys in the media. Just for info the sample size was one (me).

C

Anonymous said...

"As I understand it the survey was conducted by the Forum of Private Businesses ..."

I suspect that the FPB's (a small business lobby group) was a different survey.

Dave.

Stephen said...

yea, well it is about time many of these businesses woke up to the reality that we now operate in a global space.

Most of the country are shopping on the Internet and chin-wagging on Facebook and Myspace and our retailers are missing out on engaging with customers in a variety of significant ways.

Hence Woolworth and MFI! Both of whom had ample opportunity to develop strong brands on the Net.

12 years ago i was asked to give a presentation to top UK retailers and insurance underwriters.

It was called Virtual Retail World & Virtual Insurance World. It showed what was possible and profitable about the Net.

Only a few of these CEO's ever invested significantly in the Net at that time and those that did are still very much in business.

In fact the companies that are doing well have actually got to a stage where their off-line brand identity is almost totally integrated (and in some cases dominated) by their online persona.

Online brands have become the dominant force. Or at the very least - an alternative leg to stand on when the going gets tough.

Just no one in this country seems to understand Strategic Management - or seems to run their businesses with "strategic intent" in mind.

Reckon we're a nation of fire fighters!

Stephen said...

ps...

I was talking to some people the other day who have been to school for a long time and they said that they have MBA's. Master of Business Administration for the uninitiated.

Anyway, very few of these people knew anything at all about "disruptive technology" - which i had thought would be a hot strategic marketing topic in their school. Those that had covered it said that they would never be allowed to employ such tactics, given they were at the very most - focused on market penetration and new business development.

What that told me was that these people who are at the top of some of our top UK companies have never been given the freedom to employ such aggressive moves. And what that told me still further was that they could only use their MBA's in limited ways.

What a shame that they must work for someone else and not use their education. I guess - that is the beauty of operating as an independent. No holds barred.

Inspire new market, Covert the customer - slay the competition with a huge axe!

Anonymous said...

Stephen

I think Woolworths and MFIs demise had little to do with the lack of a good web presence.

As for disruptive technologies, as someone who has an MBA, I can confirm that it is something that came up in my course. As for 'being allowed' I suspect that has more to do with the corporate position of people you spoke to coupled to their personal outlook. I am no defender of MBAs though. It's great if you want a corporate career but they are lousy preparation for an entrepreneurial career.

C

Stephen said...

I think Woolworths and MFIs demise had little to do with the lack of a good web presence.

I must disagree here. Many business people in this country see a website as merely an extension of their promotional materials. Or at the very best, an insignificant revenue stream bringing limited profits.

What Woolworth and MFI should have done was position their retail operations such that they had a strong foot in the bricks n mortar world and a strong foot on the Net.

They should have downsized their bricks n mortar operations and upsized their online operations until they reached a healthy balance.

There are good inbuilt contingencies of course in running such a "Two World" strategy.

My 0.2c

Anonymous said...

Woolworths and MFI collapsed due to the cost and availability of credit i.e. their ability to refinance their debt. It was the credit crunch that did them in.

I agree that a good internet strategy is important but in this case it was not the deciding factor. Both businesses were marginal anyway and the cost of credit simply tipped them over. There are a number of retailers who are in similar positions, sitting on huge debts that will be very expensive to refinance. The best internet strategy in the world won't save them.

C

Mr A Dragon said...

You could argue that Woolworths and MFI failed for a number of reasons - not embracing the web qickly enough might be one, the credit crunch certainly finished them off..

But, basically, both these businesses had an identity problem and a positioning problem, what was their USP? What did they offer that thier competitors didnt?

This IMO came about through years of poor management from the top.

Stephen said...

The best internet strategy in the world won't save them.

It wouldn't of saved them implementing it at the end - no.

My point was.... they could have reorientated their businesses towards selling online 12 years ago.

They had the opportunity too, but they went for "same old same old".

Their past poor decisions just caught up with them.

Its not as if people could say "well its all very well with the benefit of hindsight".

It doesn't take a rocket scientist to work it out.

Their products could have sold well ... Look at Play.com, Ebay and many others etc.. They could have been right in the thick of it.

But they went for "same old same old".

Anonymous said...

Mr A Dragon is right of course, there are many reasons why Woolworths and MFI failed but what killed them off was the cost of credit. Woolworths was profitable last year remember.

Don't be too hard on the management team. They were locked into a business model and had little room for manoeuver.

C

Stephen said...


Don't be too hard on the management team. They were locked into a business model and had little room for manoeuver.


Its the same old problem.

Managements loyalty and capability is focused toward maintaining the status quo and not on developing the true potential of the brand.

On the whole, we are a nation of maintainers. Look forward to seeing a bit more leadership this year.

hani said...

We have a small, traditional, oldy worldy sweet shop near by. The shop, which is situated in a small riverside town, is always busy, particularly during the many music festivals held in the town. The shop also has an online presence which accounts for at least half it's business. They have customers all over the world. November and particularly December 2008 were their busiest months ever for online business. A long established traditional business which continues to thrive with the help of the web.

Stephen said...

yes, good example Hani.

I've been watching http://www.buildabear.com/
since the late 90's. And these guys are only flogging one product.

Just think what MFI or Woolworth could have spun from their investments online had they chosen to reach out effectively?

Why operate in one paradigm, when there are others to choose from?

Why position your business in one camp when you can effectively deploy your investments in multiple camps?

Especially when most of your marketplace is playing World of Warcraft or hanging out on Myspace.

heh!

Rachel Elnaugh said...

The problem that retailers now have is that people have too much stuff already and with most now maxed out on credit cards and being thrifty everyone is looking for the cheapest deals, recycling old things or buying on eBay.

Retail is simply not a good place to be, not now and not in the future - and neither are businesses which peddle unnecessary 'stuff'.

This in turn is a real problem for Gordon Brown as where do most of his tax revenues come from? The financial sector and consumer spending.

What is needed here is some real leadership, vision and long term strategy here - training and investment in core industries which will form the backbone of tomorrow's economy, those to me have to include renewable energy, technology and bioscience as well as the health and well-being sectors.

I'd also be defending key industries whose loss would make the country extremely vulnerable - that includes energy, farming, engineering and vehicle manufacturing.

The problem is, Brown is only focussed on the short term quick fix - i.e. what will get him re-elected - not what policies will generate wealth for future generations.

It's the same reasons those Woolworths middle management executives drove the business into a brick wall - they were too incentivised to generate short term quick fix profits rather than restructure the entire business to take advantage of changing consumer trends. Restructuring takes too much time to deliver results.

This is where entrepreneurs have a huge advantage! We can adapt far more quickly than the big corporates - and yes Stephen, be as subversive as we can get away with to run with market changes before the big boys even think about trying to catch up.

hani said...

Yes I agree Stephen. Important to look and think outside the box.

Stephen said...

so so right Rachel.

I know 14 year olds who are making more profit than multi-million revenue earning businesses.

In many cases, these guys could generate more customers by pressing keys on their keyboard in 2-3 hours on the Net, than the marketing and biz team could do in a year.

Oh yes, its all to easy to stand and gloat.

But i say to them........

Wake up to the Mad Max world of future business.

Anonymous said...

As someone with a business in engineering I'd rather Gordon Brown tries to help elsewhere to be honest. What worries me about government 'help' is that it has the potential to distort the market somewhat. All sectors have weak businesses in them and the recession will rightly take its toll on them. Propping up flawed businesses is not the way to go as it damages the rest of us who have been prudent and invested for the long term. Sure, I feel sorry for the employees of these firms but as Japan's lost decade tells us, propping up failed businesses is worse that letting them fail.

Rather than intervening directly in the businesses, Gordon should do more to target demand. For example, offer better grants for environmental projects, both commercial and domestic. With the exchange rate the way it is UK engineering firms (who in my opinion are some of the best in the world) are very competitive and if you create demand will gladly fill it. This creates a virtuous circle and we all benefit.

C

Stephen said...

yea, right there C.

My cynical mind tells me that there is more to this debarkle than meets the eye.

Someone or something just weakened and infiltrated our capitalist system.

2009 said...

It is all about Cost of sales - and make them make a return make us all happy -

Yes we are in an economic downturnm but there is still money and business to be made in a few sectors..
Recruitment (yes if it is controlled correctly i.e. not greedy you will succeed)

Debt managers (even consulting)

Drivers (undercuts)

Property management (undercut competitors again)


I am excited for 2009 are you?

Stephen said...

yea, i am excited "2009".

It is gloves off time.

heh!