Recession Survival Strategies Cost UK SMEs £16bn

A fascinating research report came out this morning which is really useful for students researching the UK recession and for teachers who want to top up their understanding of what really goes on inside small and medium-sized businesses in the UK…

UK entrepreneurs invested up to £16 billion of their own personal savings to get their businesses through 2009, making this the UK’s ‘piggybank recession’, according to new research released today.

The second ‘DNA of an Entrepreneur’ study, from Hiscox, provides a detailed account of the personal toll that the economic downturn has taken on the country’s small business owners.

One in five (20%) SME bosses took the decision to invest, on average, £17,030 of their own savings while one in three (34%) slashed their own salary to cut operating costs and improve cash flow.

At the start of the recession over three quarters (76%) of SME bosses believed they would survive unscathed. The reality, according to the research, is that they have faced more than financial turmoil:

* One third (33%) increased their working hours by, on average, 12.5 hours a week
* One in ten (10%) worked over 50 hours a week to keep their businesses afloat
* Almost two in five (38%) have suffered from stress, and a quarter (24%) have been unable to sleep due to worrying about their businesses
* Over one in ten (13%) have seen their marriages suffer.

And SME bosses made sacrifices to protect their staff as well as their businesses – while 34% cut their own salary, just 10% cut the salaries of their senior staff.

Looking to the future

Having survived a difficult year, expectations of 2010 are now cautiously optimistic. Over half (55%) of bosses report feeling positive about the year ahead, and a quarter (25%) will even be expanding their businesses in 2010. Half of entrepreneurs (50%) surveyed felt they had made all the right moves to survive the recession, and would not do anything differently if faced with the situation again.

SME bosses in the UK survived the recession through high levels of personal sacrifice and by adopting a focused business strategy. Survival strategies adopted by successful SMEs included:

* Focusing on securing relationships with existing clients (36%)
* Reduced personal salary (34%)
* Worked additional hours (33%)
* Focusing on securing new business deals (31%)
* Invested personal savings (20%)
* Investment in adapting programmes and services to meet client needs (12%)
* Recruited additional specialist staff to help attract or retain new clients (10%).