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Still in recession or turning in Jan?

So things are worse than clever people thought (BBC). And the recent figures from my business support this as I wrote earlier about worrying signs. However a BT survey published this week says that 75% of SMEs think things are going to turn up in Jan next year! If I was writing this earlier in the week I might have taken some comfort from the BT report findings. But today, as Britain is confirmed into the worst recession since records began in 1955, I find it hard to be optimistic. October is always a low month for my biz but if this month finishes as it started I have to go back to Oct 07 to find worse monthly figures. At this rate all the growth we've managed to maintain in 2009 will be all but wiped out and whether this year finishes up or down on 2008 will be entirely dependant on the Christmas period. Like us, I'm sure that the SMEs participating in the BT survey have been investing in both technology and staff in the hope of being well placed for the expected recovery. And I quite agree with Digby Jones when he says that embedding technology in the heart of a business is vital to both future growth and current survival but unlike the BT SMEs, my worry is increasing not decreasing. We're lucky to have zero debt, a healthy market position, apparently weakening competition, good technology and great staff. But if October's figures are the start of a second dip, our recent investment could come to look rash. I hope I'm wrong.

The Bank of Essex

This could be interesting.  A local council setting up it's own bank to help SMEs.  I can't help but think they'll find the hoops they have to jump through, in order to actually start lending, too difficult in the end.  But credit where it's due to Essex Council for being prepared to try.  And allocating money where it's mouth is.

Budget and SMEs

As the dust begins to settle on yesterday's Budget and various headlines seek to portray the event in a way that appeals (or gleefully horrifies) their readership, I'm struck by a glaring omission. Whether the budget was an "attack on the rich", the "death knell of a dying government", "a class war divide" or a "trap for the Tories" it doesn't appear to have been much help for SMEs.  True, most SME owners fall well below the £150k threshold for the 50% tax rate or the restrictions on pension tax relief but that's not much to sing about. I suspect that the strategic investment fund for struggling businesses will be eaten up by big biz (who represent 1% of businesses in the UK) and will involve huge amounts of red tape which SMEs have no capacity for. Maybe some of the support for the unemployed will help us employ people we wouldn't otherwise be able to afford, but I'm not hopeful and suspect the potential accusations of exploiting cheap labour (which may be true in some cases) will stifle the scheme as it has in the past. So we carry on as before. We carry on employing 50% of the UK work force. We carry on being the "engine of growth". And we carry on taking the real risks in this economy, without a safety net, and hope in vein that someone notices how important yet unheard we are. 

SME Listeners

Am trying to prepare for James Max's Business Matters show that I'm going be doing tomorrow on LBC Radio.  It's amazing how all the biz stories I come across are either related to big political issues or big corporates.  There really is very little space for SME issues in the main coverage.  (A theme of mine.)  Yet we keep hearing how important the SME sector is to the economy now and surely a large part of the audience for a show like James's will be small biz owners.  But where are they in the news or even online?  Just think of all the taxi drivers for a start!  

Quite like this point from 'I could be the Governor of the Bank of England' about UK manufacturing.

Will it buy us a boat?

This is a phrase my biz partner and I use to mean, "are we doing more than paying overheads, wages, suppliers and taxes yet?" i.e. did we make any money for ourselves?  And laughable though it sounds, it is surprisingly easy to forget.  You can be so busy running your business that you forget to check if you can feed yourselves.

Now I know it's also very easy to decide how much you need to earn, take that out of the business, then wonder why your going bust.  And though I've seen it done several times, it's stupid.

So how do you move from keeping your head above water and paying your staff to the excess wealth that everyone who doesn't run an SME thinks you're making already?  How does one move out of the corner shop, so to speak.

The honest answer is I don't yet know.  But having got our business to the state where it will just about run itself without generating much in the way of dividends, this is the next important question to which we shall address ourselves.  The truth is that I have no real desire for anything as opulent as the picture above suggests.  But if you can't create a modest pension for yourself from your endeavour, what are you in business for?  Thoughts and ideas, most welcome!

What does SME stand for?

I've been asked this a lot in the last week.  Apologies for the lazy use of acronyms.  It stands for Small and Medium-sized Enterprises, i.e. Small Businesses.

There are various definitions of what constitutes an SME.  But things that stand out for me (and show just how vital we are as a group to the UK - especially now) are that; 

• "out of a total of 4.8m UK businesses, less than 1% were large corporations (i.e. over 250 employees)"
  
• "the majority of the [UK] workforce is employed by SMEs. Statistics [] show that out of 4.7 million businesses in the UK, 99.3% were small firms with fewer than 50 employees, and 0.6% were medium firms with 50-249 employees."
  

So where are they and why is their voice always drowned out by the 1%?  We all know the answer is time and resource but if ever there was a time for government to make an extra effort to tip it’s ears towards the SME community….

Quantitative what?

Do any small biz people believe that Quantitative Easing will help them in any way? I think I get the idea. You make money cheap and banks will lend it more freely. But as far as I can tell there's a heavy dose of human nature at work in the behaviour of our illustrious lending institutions at the moment. When something is in short supply and you're worried about how much of it you're going to need in the near future, you get your hands on as much of it as you can, as cheaply as you can, and horde it for as long as you can. So, as before, if SMEs need credit they're going to be in trouble. And nothing HM Treasury or the Bank of England do will change this Darwinian situation until an appropriate number of weaker businesses have gone under.

Businesses that have no debt and low costs should be fine in the long run but have no incentive to expand right now until the storms look like they're passing. In the meantime we mend nets and hold tight.