Only 27% of small and medium-sized companies in the UK are credit checking new customers

Unpaid invoices and a lack of cash flow are two of the main problems experienced by small businesses at the moment, with some firms only one large fulfilled but unpaid invoice away from collapse.

"It is never a good idea to take chances with new customers, but it is more important than ever when times are hard to ensure that you are trading with legitimate businesses," said Doug Crawford, group managing director at Cattles.

"SMEs should take every opportunity to minimise the risks they face in the current environment, including introducing a policy to credit check every new customer as standard."

Source: Cattles Invoice Finance.

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Small business owners have been warned that if they do not address the increasing stress levels of staff then their company's productivity will suffer

Recent research by Investors in People and YouGov has found that 38% of employees in the UK say that their stress levels are higher than a year ago, but only 29% think their business is doing anything to address this.

Only 5% of employees said they are receiving more support from their managers than they did before the downturn and a mere 12% think their manager has adapted very well to the effects of the downturn.

"Increased stress in the workplace is associated with reduced productivity. Our research suggests that management has so far not addressed the current increase in workplace stress," said Simon Jones, chief executive of Investors in People.

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Business lending remains weak

Lending to businesses remained weak in April, according to the Bank of England's Trends in Lending report. In particular, lending to firms in the wholesale and retail trades and the manufacturing sector fell sharply over the past year. The report also highlighted that approval rates for lending to small and medium-sized businesses are falling but added that some lenders are expecting availability of credit to improve over the next three months.

For more on this story go to:
http://www.bankofengland.co.uk/publications/other/monetary/TrendsApril09.pdf


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The Intellectual Property Office is sponsoring an exciting new exhibition - Wallace and Gromit Present a World of Cracking Ideas

- which runs from 28 March until 1 November 2009 at the Science Museum, London.

We want general public and business alike to recognise the importance of intellectual property, and make informed choices to protect your innovation and creativity - in what we hope will be an entertaining way.

During the period of the exhibition, from 30 April until the end of September, we will run a series of IP business events through new and existing partnerships in a dedicated room linked to the exhibition.

Find out more: http://www.ipo.gov.uk/whyuse/events/events-bep.htm

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The Department for Business, Enterprise and Regulatory Reform (BERR) has published a leaflet for businesses detailing the importance of paying on time

The advice, which has been created in conjunction with the Institute of Credit Management (ICM), outlines what businesses can expect when they sign up to the Prompt Payment Code.

To read the leaflet go to:
http://www.icm.org.uk/PDFBin/188-075%20BERRpayingontimelft-web.pdf

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Women are only half as likely to start their own business as men

The research also found that by the time new businesses have been established for two years and set on a growth path, just 13% of companies are owned by female entrepreneurs.

Despite the relative lack of female owned firms, businesses run by women contribute £130bn per annum to the UK economy and experience similar growth patterns and turnover as companies owned by men.

Source - Women's Enterprise Task Force (WETF).

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UK manufacturing firms expect the decline in activity to ease in the next quarter

The survey for May reveals that 17% of manufacturers expect their output to increase over the next three months, against 34% that anticipate a drop in activity.

The resulting balance of -17% is up from -32% in April, and takes the measure to the highest level since September 2008.

"After scaling back production very sharply at the beginning of the year, manufacturers can see a glimmer at the end of the tunnel. They still expect manufacturing activity to fall, but at a much slower rate over the next few months," said Ian McCafferty, the chief economic adviser of the CBI.

Source - Confederation of British Industry's Industrial Trends survey.

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Small companies in the UK are owed £10bn in outstanding payments

The report by Barclays Local Business reveals that on an average day small businesses are left £2,440 out of pocket as a result of suppliers or customers failing to pay up during the standard 30-day invoicing period.

The figure is up £1.7bn on last year and means that small companies have lost out on £5bn over the last twelve months.

"Despite some recent positive economic signs, it's concerning that late payments are on the rise. This is a serious issue for the businesses we talked to with around a third saying it threatens their day-to-day survival," said John Davis, marketing director for Barclays Local Business.

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Small businesses in the UK are wasting more than £7bn on unnecessary IT equipment

Ignorance of new technologies is driving many small firms to invest in traditional server technology in the often false belief that it offers the cheapest and most secure access to business files.

Few companies are examining the true cost of server computing or looking at alternative options, such as cloud computing, which could save their businesses around £1,500 a year.

"Just a few phone calls or some limited web research can give you an idea of the upfront cost of buying a new server but not enough companies are aware of the longer term investment required," said Dan Conlon, founder of humyo.com.

"We have developed an equation to enable small businesses to work out the true cost of server-based computing in order to help them weigh up whether it is the best, most cost effective option for them."

For more information visit www.humyo.com

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Crisis management and business continuity planning - the impact on your business

Nobody likes to think that the worst might happen to their business, but when it does it can have devastating consequences. A reported one in five companies suffers a major disruption every five years and 92% of those affected by fire or flood never recover. The best thing you can do to protect your business is be prepared.

What is a crisis?

A crisis is a situation beyond the scope of everyday business, which threatens the operation, safety and reputation of your company. The exact nature may depend on your business' circumstances, but could include:

- Natural disasters – i.e. flooding or storm damage
- Theft or vandalism
- Fire
- Power cuts
- Fuel shortages
- IT failure
- Restricted access to premises
- Loss of key staff
- Outbreak of disease or infection
- Industrial action

You should assess the likelihood of a particular crisis occurring to your business and its possible frequency. You can do this by grading the probability of a crisis occurring on a scale, i.e. one to five or high to low.

Read more: http://www.fpb.org/hottips/419/Crisis_management_and_business_continuity_planning.htm

Source: Forum for Private Business

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Around 60% of small and medium-sized firms in London are concentrating on expanding their businesses during the recession

The survey of more than 3,000 small businesses in the capital found that despite three-quarters being affected by the economic downturn the majority of small firms do not want to just consolidate their firm, but actually expand.

The poll also found that 42% of small companies are looking to exploit new business opportunities and 17% are developing new products and services to increase their market share.

"There's a great deal of optimism in the face of the recession, with the majority of SMEs remaining committed to growth," said Patrick Elliott, chief executive of Business Link in London

Source: Business Link London.

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The government have announced that the minimum wage in the UK for workers over 21 years old will rise by 7p to £5.80 an hour from October this year.

The rate for 18 to 21-year-olds will increase by 6p to £4.83 and for 16 and 17-year-olds will go up by 4p to £3.57.

Many small business groups had called on the government to freeze the minimum wage due to the number of companies that are struggling in the economic downturn.

"Businesses should be free to negotiate pay levels with staff individually according to what is affordable during these tough times - rather than keep up with a one size fits all pay rise," said John Wright of the Federation of Small Businesses (FSB).

"The FSB is grateful the government has raised the minimum wage by only 7p, but with one hundred and twenty businesses closing a day and when many are struggling with cashflow, this is unfortunately another cost on employers."

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How to attract investors to your business

As access to 'traditional' sources of credit continues to be a problem for many small companies, 'alternative' sources of finance are becoming more attractive for many small business owners.

Before the banking crisis, most small companies could reply on their banks to provide borrowing facilities. These days, not only are borrowing terms less favourable than they were, but some banks have been arbitrarily slashing overdraft limits for businesses which are deemed to be 'risky bets'.

Alternative forms of finance include factoring (to free up the value of your invoices for a fee), and public sector initiatives such as the Enterprise Finance Guarantee Scheme (which has had mixed reviews to say the least).

As savings rates and stock market yields have tumbled in recent months, many investors may also consider investing in small businesses.

This form of investment presents an opportunity for small businesses seeking working capital or replacement to bank debt. It is more stable as capital cannot be withdrawn - whilst bank debt may be pulled at short notice.

At the same time, many small companies will benefit from the valuable advice and support that experienced investors can provide.

Here are some of our most popular guides to attracting investors:

Essential facts about business angels
http://www.bytestart.co.uk/content/finance/funding/business-angels-finance.shtml

Business plans for business angels
http://www.bytestart.co.uk/content/businessplans/30_2/business-angels-plan-1.shtml

How to secure business funding for start-ups http://www.bytestart.co.uk/content/finance/funding/business-funding.shtml

Source: Bytestart

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Trade credit insurance top-up scheme goes live

The Government's trade credit insurance top-up scheme, which was announced in Budget 2009, is now operational. As of 1 May, businesses suffering from a reduction in credit insurance will be able to buy up to six months' top-up cover. This will allow firms to either restore cover to the original level or double the amount they can get through the private sector, up to a value of £1 million. The scheme runs until 31 December 2009 and will make £5 billion of top-up cover available.

Read more at:
http://nds.coi.gov.uk/environment/fullDetail.asp?ReleaseID=400321&NewsAreaID=2&NavigatedFromDepartment=True

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Small firms reluctant to chase late payments

Over three-quarters of small firms are reluctant to chase payments through the courts despite knowing about their rights to do so and about rights to charge interest on late payments. That's according to research by Cattles Invoice Finance, which interviewed 300 small business owners. The research also revealed that one of the main reasons given by small firms for not charging interest or taking legal action was the potential damage it could cause to their relationship with clients.

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Banks condemned by Treasury Committee for failing to support small firms

The UK's banks have been dealt another damning blow in the latest report on the banking crisis from the Treasury Committee. Bankers were blamed for making "an astonishing mess" of the financial system, leaving the Committee "very concerned about the availability and terms of credit available to the small business sector". Committee chairman John McFall added: "There is clearly an unresolved inconsistency between, on the one hand, bankers' assurances that they are increasing their lending and, on the other hand, widespread and clearly sincere complaints that credit is difficult to obtain and increasingly expensive."

The report, while welcomed by the small business sector, has been criticised by the British Bankers' Association (BBA) for not doing enough to reflect the work by the banks to help restore the economy and for "seeking headlines". BBA chief executive Angela Knight said: "As an industry we have stepped up to the plate of change and are already addressing many of the points identified by the Committee."

Read more here: http://www.parliament.uk/parliamentary_committees/treasury_committee/tc0809pn37.cfm

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The Carbon Trust is offering £100m worth of interest free loans to SME businesses who invest in energy efficient plant and machinery

The scheme will be open to those looking for between £5,000 and £200,000, with the money being given out over the next two years.

“The size of the loan offered and its repayment period will be based on your projected CO2 savings, which will be assessed by the Carbon Trust,” explains the trust’s website.

Impressively, the application process has been sliced down to an average 10 days (the 763 businesses who secured loans last year had to wait four to six weeks). This is a far sight less time than the three to four months grants and other government-backed finance often take.

“Come and get it”, said Hugh Jones, director of solutions at The Carbon Trust. “There’s always been financial benefit from carbon saving but we are bringing it closer to home by offering the money interest free.”

The government increased the trust’s loan fund in this year’s Budget, meaning around twice the number of businesses should now be able to access the loans.

Tom Delay, chief executive of the trust, pointed out companies could reduce their energy costs by up to 20% by investing in energy efficient plant and machinery.

Find out more here: http://www.carbontrust.co.uk/energy/takingaction/about-loans.htm

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A total of 20m working days could be lost this year as a result of stress related absences from staff

13.5m days were lost as a result of stress between 2007 and 2008 in the UK, and a recent survey by Croner revealed that 50% of workers feel more stressed now than a year ago.

"The survey reveals that work is the uppermost concern of employees at the moment. This should be a real wake-up call for British bosses who may be in denial that stress is a concern in their organisation," said Gillian Dowling, employment technical consultant at Croner.

The research found that the top three causes of stress for UK employees were work (63%), finances (62%) and the economy (49%).

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Businesses are in danger of losing their future leaders

According to research by the Chartered Management Institute (CMI), companies are not providing adequate training, with the number of managers focusing on developing staff falling 20%,.

The CMI poll found that the number of business managers focusing on developing core staff declined from 44% in September 2008 to 22% at the end of March 2009.

46% of those surveyed think that their firm will lose future leaders of the company by not providing sufficent training and career opportunities because of the recession.

"Where possible organisations should look at other areas of the business before cutting back on training as skills development is essential if they are to be well placed when the economy eventually picks up," said Petra Wilton, director of policy and research at the CMI.

Leaders & Managers Grant of £1000 available - click here for more information.

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Wages in the UK have declined 6% in just 12 months, according to data from the Office of National Statistics (ONS)

The average weekly wage is now £459.10, down 5.8% year-on year from February 2008 - the largest drop since the ONS began collecting such data in 2001.

Many small business owners have frozen salaries, or even cut pay in an attempt to combat the economic downturn and as an alternative to making redundancies.

The figures also revealed that the financial sector was the worst hit, with bonuses more than halved from £1,312 a week to £549.

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The rate of job losses fell steeply from around 47,000 to 7,000 from the start of 2009 to mid-April

According to Warwick Business School there were around 24,000 job losses in the four weeks to mid-December, 47,000 in January, 24,000 in March and just 7,000 in the four weeks to April 12th.

If the Warwick figures provide an accurate predictor then the labour market could recover sooner than economists forecast.

"Although the data are not an indicator of unemployment per se, I think the steep fall in the ‘announced job losses' gives a pretty good indication that the labour market is recovering somewhat," said Thomas Prosser, researcher at Warwick university.

Official statistics recently revealed that the number of unemployed people in the UK has risen to 2.1m - the highest figure since 1997.


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33% of SMEs neglect their websites

Small and medium-sized companies are neglecting their websites in the recession, according to new research by web hosting company Fasthosts Internet.

The survey revealed that 33% of SMEs are not updating their websites because they do not have enough time, even though just under 70% of small firm owners are aware that websites require regular attention to be successful.

"In challenging economic conditions, business owners are more stretched for time and resources than ever," said Steve Holford, CMO of web host Fasthosts Internet.

"However, it is important to remember that often the simplest improvements to a website can make a noticeable impact on sales conversion rates. Even a modest business website must receive regular attention to fulfil its potential."

www.ukba.co.uk

Free flights, car hire and hotels for SMEs

British Airways has offered UK Trade & Investment (UKTI) 4,000 international return flights for its UK-based SME customers. The offer aims to help enterprising companies make essential trips to grow their business abroad in these difficult times.

Minister for Trade & Investment Lord Davies of Abersoch said this offer will help small and medium sized companies’ look to new business horizons.

“This exciting initiative has enormous potential. It shows what can happen when big business and Government work together to support British firms and the economy.

“Although the global slowdown has meant increased challenges for businesses, it has also created opportunities internationally for those that want to expand into new markets.

“Exporting companies are more competitive and resilient. Yet many SMEs can find it hard to break into new markets on their own. They overestimate the barriers and underestimate the rewards of exporting to key markets.

“This generous offer by British Airways significantly reduces the costs faced by UK exporters, allowing them to explore their overseas expansion potential."

Other partners include Avis and Accor Hotels.

Read more here: BA flights | Avis/Accor

www.ukba.co.uk

Cloud computing booming as small businesses cut down on expensive software

Most of the UK's small businesses will be using 'cloud software' solutions in some form by the end of 2010 according to a new survey, as the downturn forces companies to look for alternatives to the more expensive traditional software offerings.

What is Cloud Computing?

A recent article about the benefits of cloud computing describes what cloud computing is in detail, but in a nutshell, it is "putting software and data on computer equipment in a safe and secure location 'somewhere' on the Internet. The location doesn’t matter as long as it is 'well connected' and allows access to this data or software from anywhere in the world."
Cloud Computing and small businesses

According to the Gooroo Software survey, 12% of respondents were already using cloud software solutions (or 'SaaS' applications). 31% said they planned to start using such products by summer 2010, and a further 11.5% would do so by the end of 2010.
Respondents listed the benefits they expected to gain from cloud applications, with the majority (65%) naming an overall reduction in IT costs. Improved efficiency (50%) and greater working flexibility (50%) were next highest, with easy set-up and management close behind at 46%. Access to business applications from any location was also rated highly (42%).

The cloud applications that survey respondents believed would most benefit their businesses are new accounts / financial software (50%); retail and e-commerce management software (25%); stock control (22%); enterprise resources planning (ERP - 21%) and CRM (18%).

The current economic climate was also forcing SMEs to change their plans to buy or update business software. 40% said they had already changed their plans, and 21% planned to postpone spending until the situation improves.

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Useful Guide on Information Security

The Direct Marketing Association with the Information Commissioner has
published a very useful guide on what we all should be doing about making sure
business and personal is safe within companies and organisations.

It has some really good advice and some useful pointers to keeping vital business information free. It even covers areas such as MP3 players plugged into the companies system.

Download for free at http://www.t2dgroup.co.uk/downloads/4897_S4.pdf

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Alternatives to Firing Employees

Cost-cutting is an essential component of survival.
Companies are looking to save money, and cutting salaries yields larger savings. Restructuring correctly is not an easy task, nor a decision to be taken lightly.

Before you start firing employees, here are three alternatives to consider:

1. Automate decision making and manual tasks

Workflow software automates employee tasks, enabling relocation of employee resources from their current jobs to jobs that need manual intervention, thus making the employee's contribution to the company more efficient.

2. Make existing employees more efficient.

Your goal is making employees work smarter, faster, more consistently and with more focus on value creation.
• If organizational changes cause employees to find themselves less effective - retrain and relocate them.
• Automating and improving internal business processes increases efficiency, productivity, and operational visibility facilitating better utilization of available human resources.

3. Re-evaluate employees that don't contribute

• Look for the person who is invisible and flies under the radar
• Look for the person who never says anything
• Look for the person that has others doing his tasks
• Look for the person that has survived because of their social skills, not their productive skills.
• Look for the person whose work quality is never above mediocre

Talk to these employees, explain your concerns. Get their approval to be moved to another group in the organization for a trial period. Enable them to "start a new page".

Moving these employees from their current group to another group causes vacuums in the organization, leaving opportunities for existing employees to grow and show their worth.

Your employees are the ones that ultimately deliver customer satisfaction and create value in your business.

Let business improvement initiatives lead your people to be creative, and supply them positive feedback.

Original Article can be found at http://www.pnmsoft.com/firing_employees_alternative.aspx

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Small businesses losing faith in Government following 2009 Budget

In all, 97% of respondents to the organisation's post-Budget online survey believe nothing has been done to ease the burden of costs they face and 94% feel that the Budget did not address the issues threatening the survival of their businesses.

Fewer than 1% of business owners surveyed thought that the Budget was an effective response to the needs of their businesses. 68% of respondents said it would prove to be 'ineffective' and a quarter that it would prove to be 'harmful' to their businesses. Small firms were more positive about measures announced in the Pre-Budget Report than the Budget according to the FPB's most recent Referendum quarterly survey of members, which was conducted in March 2009. 6% of the business owners taking part said the Pre-Budget Report contained effective measures, 63% believed it was ineffective and 16% deemed it harmful to their businesses.

66% of businesses surveyed before the Budget announcement said that restoring business confidence should be prioritised. In addition, 64% felt that the Government should address plummeting consumer confidence. However, in the latest survey, 91% of small business owners felt that the Budget did not address these issues.

Read more here: http://www.fpb.org/news/2183/Small_businesses_losing_faith_in_Government_following_2009_Budget.htm

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The number of firms facing County Court Judgements of £5,000 or more or wind-up petitions in Q1/2009 increased by almost 90%

According to research by Begbies Traynor, the research also revealed a 60% increase in the number of companies that faced court action, or had insolvent or out of date accounts. The total number of firms showing signs of stress rose to 84,648 in March this year from 53,240 a year ago - a rise of 59%.

"Regrettably, experience tells us that company and personal insolvencies, like unemployment, are a lagging indicator, and are therefore likely to continue to rise through the recession," said Begbies chairman Ric Traynor.

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The majority of businesses in the UK are planning to freeze wages this year

The British Chambers of Commerce's survey of more than 400 companies found that 58% of companies are planning to freeze salaries and 12% will cut their employees' wages.

"There was some support in the Budget, but more is needed to help Britain's embattled businesses so that they can drive our economy out of recession, creating jobs and wealth in the process," said BCC director general David Frost.

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Leading entrepreneurs have warned that the Chancellor's new 50% tax on those earning more than £150,000 could lead to an exodus of talent

"Higher taxes may be politically attractive in the short term, but I think that this could be a real hindrance to the next wave of UK entrepreneurs and international companies looking to invest," said Sir Richard Branson.

Michelle Mone, the lingerie tycoon, revealed that she was withdrawing her support for Labour and branded the forthcoming top rate a "disgrace" that would damage the economy.

The director of the Confederation of British Industry, Richard Lambert, said that he had already spoken to some businesses that were considering relocating because of the tax increase.

Source: newbusiness.co.uk

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Almost half of small firms in the UK have faced difficulties coping with the mass of UK employment law

The findings are released the day before Equalities Minister, Harriet Harman, publishes the new Single Equalities Bill. The British Chamber of Commerce (BCC) have warned that the new legislation will increase the pressure on small firms that are already struggling with the amount of red tape in the UK.

"Too often the government sees the answer to a problem as being more legislation. Not least in the area of employment law. The result of this will mean that it will take longer to get out of recession and companies will be loathe to take on more employees," said David Frost of the BCC.

"If we are really serious about helping businesses, about creating jobs, why not have a complete moratorium on new employment legislation for the next three years?"

Source: British Chamber of Commerce

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The National Council for Work Experience (NCWE) has launched a free online information and recruitment initiative to help SMEs

Find Me A Student! is a central resource for businesses to find local information and contact details for university placement services, job shops and independent placement organisations with student initiatives.

"The downturn has seen business interest in establishing student placement schemes soar," said Heather Collier, Director for the NCWE.

"Many HR professionals working in smaller companies have expressed an interest in implementing a work placement scheme but felt that a lack of information has prevented them from gaining access to students with the desired skill set."

Soucre: http://www.work-experience.org

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