SMEs not looking forward to Christmas as a lifesaver

A recent report by MYOB Business Monitor has shown that around 70% of small and medium-sized enterprises do not expect to see any improvements in revenue over the next year. The majority of those surveyed have seen no increase, or have experienced a decrease in revenues in the last year. In the ten-year history of the survey this is the worst result ever recorded.

Tim Reid is the Chief Executive of MYOB and he is said, “This just shows that people’s expectations and confidence in the economy is at one of its lowest points ever.” The survey shows that many businesses do not believe that they will be able to survive the next half year if consumers do not start spending more.

Reid continues, “Many factors are influencing how small businesses in the UK are trading. Some of this is due to global economics, such as the European debt crisis and the downturn in North America. Many people are also beginning to doubt that China can continue to grow at its current rates considering the rest of the world’s growing economic problems.”

The survey involved 1000 businesses and it paints a grim picture for the future of small enterprise in the country. Nearly 70% of businesses expect there to be no growth in the next 12 months and just over 40% think there will be no recovery for another year and a half. A year ago the survey indicated that around 60% of businesses expected a recovery over the next year, this survey shows this figure to be just over 20%.

Over 75% of businesses said that their revenue is at the same level or lower than last year and the average decrease has been nearly 30%. This Christmas the survey suggests that 30% of businesses are expecting sales to be lower, this figure was only 15% last year.

Mr Reid says, “This is a huge blow for small businesses, while their revenues are down the costs they have to pay remain high. There is no fall in the cost of rent of the cost of product, this means that businesses are experiencing lower profits.”

It is not all bad news and several businesses have said that they have new work coming in and this is an indicator that the economy is improving. Also, new start-up companies have reported a growth with over 40% saying that they are expecting new work to begin shortly. Nearly 30% of businesses under five years old are also expecting more work than they anticipated. Businesses over 10 years old however are saying they are expecting less work.

The survey also highlights that different results are expected in different sectors. Construction and trading are performing the worst with only 15% thinking that there will be a recovery in the next 12 months. Business and professional services are performing the best with nearly 30% expecting a recovery in the coming year.

Reid continues, “Many small businesses are readying themselves for what is expected to be one of the worst Christmases in years. People are simply not spending as much as they normally do and they are choosing to save the money they earn instead. There are however, ways that businesses can get through these hard times, for one they should learn to embrace the internet as a sales medium.”