Small businesses in the middle of the crunch - insights for students

Lots of business surveys around at the moment provide insights that the savvy AS business student might bear in mind as they do their revision. A particularly useful one is just out from O2…

The O2 Small Business Confidence Index is a regular survey of the SME sector. A good sample size (3,000 small businesses) too. Key findings from the latest survey of SMEs include:

- Despite 49% feeling their confidence was at an all time low, 66% of owners are determined to make it through the downturn (I’m a bit disappointed that percentage isn’t much higher - my experience of entrepreneurs is that nearly all remain “determined” - often in the face of severe adversity!)
- 21% have forecast growth over the next six months, 7% say their business has been unaffected by the recession and 5% see the current climate as an exciting challenge
- The greatest threats to survival are concerns over cash flow and a lack of support from banks
- Small businesses are hoping the government will help businesses get finance, with cuts in corporation tax and commercial rates seen as ways to improve levels of confidence
- 62% haven’t noticed a change in their banks lending policies, with 2% saying they had benefited by receiving a loan
- 39% are planning a headcount freeze while 11% plan to make redundancies
- 17% are looking for smaller premises and 13% have not renewed a lease on their premises and are working from home
- 49% are continuing to spend on IT, with iPhones and BlackBerry smart phones seen as the most popular products

That key point - “the greatest threat to survival is cash flow” is a terribly important one for students to appreciate and understand. In troubled times, it is not so much about sales gowth. Cash is king.

Almost one in five small businesses are looking to downsize their current location too + an increasing number looking to work from home. Good points to note for AQA Unit 1 (and perhaps also for lesson planning ahead of the new GCSE Unit specs)