SURVEY: BATTLING NORTH WEST OWNER-MANAGERS DEFY “DESTRUCTIVE COST-CUTTING” TO STAY ON THEIR FEET

HAINES WATTS

PRESS RELEASE

September 8, 2010.

SURVEY: BATTLING NORTH WEST OWNER-MANAGERS DEFY “DESTRUCTIVE COST-CUTTING” TO STAY ON THEIR FEET.

Photos here.

A perfect financial storm of destructive cost-cutting, reduction of credit facilities, bank demands for personal guarantees and slow payment by public bodies is putting the engine room of the North West’s economy under enormous hidden pressure.

“99% of businesses in the North West of England employ fewer than 50 people and, boy, are they gathering scar tissue at the moment – but they’re battling through, staying on their feet, and should be proud of themselves,” said David Fort, partner at UK top 20 chartered accountancy firm Haines Watts in Manchester and Preston.

“Government stats may be saying the UK is out of recession, but small businesses are often at the end of a chain that means an invoice generated to a client or customer on day one may go through several other businesses, and several more 30-day payment cycles, before the often-delayed cash reaches that small business. In many cases, some small businesses are actually living other businesses’ or bodies’ bad fortunes of six months ago.”

Haines Watts has conducted an in-depth survey of how the current economic and business environments are impacting upon owner-managed businesses, and the statistics are stacking up strongly against them as, in parallel, frustration mounts.

“Many small businesses are still undoubtedly living the recession. 45% have had to make a claim through the courts for unpaid bills, nearly a third of North West business owners are currently being asked to provide personal guarantees for their business, 20% have seen their banks reduce or restrict credit facilities, and 17% have had to bring in additional bank finance.

“But new phrases are creeping in to describe the challenges: half of all businesses surveyed in the North West say they have experienced ‘destructive cost-cutting’ from competitors – basically those competitors who can afford to are ‘buying turnover’ by pitching for business at whatever level it takes to win it - and 22% say they have had to pitch for work on a zero profit basis.

“That such a high level of debt recovery goes as far as court action shows that small businesses’ lack of economic muscle is being exploited. In our experience, public bodies are amongst the worst when it comes to paying promptly. The threat of court action can be effective, but by the time the court has moved – it can be too late: the small business making the claim has gone to the wall,” said David Fort.

Small owner-managed businesses are the powerhouse of the UK economy: of the 4.7 million businesses in the UK, 99.3% are small firms with fewer than 50 employees.

Of the 8,700 owner-managed businesses invited to take the Haines Watts Business Owner Survey, 645 responded giving a response rate of 7.4%. A selection of business owners were further invited to take part in in-depth interviews.

Haines Watts is a UK top 20 chartered accountancy firm specialising in the owner-managed sector, providing a broad range of services out of its 50 offices. The firm has 80 years experience and 30,000 clients.

Ends

Further information:

Iain Macauley

im@pressrelations.co.uk

07788 978800

www.hwca.com

http://www.hwca.com/offices/accountants-north-west.php