News

July 22, 2011

One in ten small firms fears closure this year

Almost a tenth of small-business owners are concerned about going under this year if trading conditions don’t improve, research by Aviva has found.

The survey of 500 company owners by the insurer found that nine per cent admitted they could go out of business if trading conditions did not pick up.

Just 13 per cent of respondents had high hopes of the economy improving, whilst 28 per cent felt there was a genuine risk of a double-dip recession.

“It’s evident that the tough trading conditions we saw last year have continued into 2011,” said David Bruce, commercial product manager at Aviva. “Confidence among small and medium-sized enterprises is as low as it has been since the onset of the recession and many feel they are in real danger of losing their businesses should the economy fail to improve this year.”

Phil McCabe, senior policy advisor at the Forum of Private Business, said the findings were to be expected. “Entrepreneurs are a generally optimistic group, but there is no denying how difficult trading conditions are right now,” he said.

McCabe added that there was a lack of adequate and accessible funding for both start-up and existing enterprises.

However, he said that the current economic situation also presented opportunities for business owners. “There is the chance to diversify into niche markets, which remain strong, and redundancies create a strong pool of staff from which to recruit,” he said.

The Aviva research also highlighted that, after diversification, most business owners were looking to sales and discounts (17 per cent) and permanent price reductions (17 per cent) to keep their business’ healthy, with 14 per cent looking to cut staff pay or privileges, and 9 per cent considering reducing permanent staff.

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