In the first of a three-part series based on a Royal Bank of Scotland study of recession strategies among small to medium sized enterprises (SMEs), we summarize the report’s main findings.
The Royal Bank of Scotland Business Intelligence 2009 Report is based on two studies undertaken by Ipsos MORI of a cross-section of SMEs (defined as having turnover of between £250,000 and £25m). The first research was undertaken from November-December 2008, and the second from June-July 2009. These are the reports main insights:
SMEs in recession: Reasons for optimism
-81% of SME leaders say, ‘We will emerge from the recession in good shape’, compared to 14% who agree with the statement ‘We will barely survive the recession.’
-38% of SME leaders say they have performed better than they expected over the past 12 months. The most common reasons given for this above expected performance were:
- Superior products / service (20%)
- Improving the cost base (15%)
- Identifying new markets (12%)
- Increased demand in our markets (9%)
- No market decline (9%)
- Continued investment in innovation (7%)
- Increasing marketing (6%)
SMEs in recession: Where it’s hurt most
-Almost one in three SME leaders (30%) estimate the value of their market has decreased a lot in the past 12 months, while nearly four in 10 (38%) say the value of their market has been stable or even showing growth.
-There has been deterioration in market conditions in the past six months.
-Most companies were ready for this downturn, or even worse conditions (70% performing about the same or better than expected).
-A number of SMEs have exceeded expectations through proactive marketing, innovations and efficiency drives.
-A minority has been taken by surprise by the severity of conditions (29% performing worse than expected).
-For most SMEs the most serious impact directly resulting from the current economic conditions has been on the level of demand (43%), but there have been issues around finance, costs, exchange rate, staffing and cash flow.
Problems with cash flow have commonly been caused by:
-Long established customers and clients that are trusted and respected finding it hard to pay their bills;
-Customers and clients losing their businesses;
-Suppliers having to enforce their payment terms more strictly.
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09/12/2009
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