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'Hardcore' firms ride out recession

Small firms are shedding staff at an increasing rate in an attempt to stay afloat, according to research revealed today.

However, for the second quarter running, the Open University Business School’s Quarterly Survey of Small Business in Britain has found a hardcore of firms - 23% - which report they are unaffected by the recession, with those in agriculture much more confident (comparatively) than those in other sectors.

The survey of around 1,000 small businesses was carried out by the enterprise research team at the Open University Business School in the final quarter of 2008.

Colin Gray, Professor of Enterprise Development and author of the report, said: “The rising unemployment reported in this quarter’s survey sends a strong message as to the extent of this recession and its impact on small businesses. In previous recessions like that of 1991, firms tightened their belts and dug in, but didn’t go quite so far in cutting staff as many are doing now.

“Small firms tend to be more vulnerable in a tough economic climate, but there is a significant minority of SMEs remaining resilient, with some even reporting increased business as customers turn to them to cut costs.”

The survey also found that small firms in Scotland have more often than their counterparts in England and Wales escaped the effects of the downturn, with 34% of Scottish firms reporting they are not affected.

More small firms also expect to cut their selling prices this quarter than increase them.

“This is the longest running survey of small businesses in Britain,” said Professor Gray. “And, the balance of small firms reporting a drop in sales has hit an all time low over the past 25 years. No wonder growth in GDP has been dropping like a stone.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .