Despite the pressures, hospitality and catering businesses appear to be reacting bullishly to the credit crunch. When asked if they had to start their business again in today’s economic climate, 67 per cent of hospitality and catering businesses would do it all again tomorrow!
The research by The Credit Show, the UK’s largest exhibition and conference dedicated to professionals associated with the consumer and commercial credit arena, shows that SMEs, including hospitality and catering businesses, plan to expand sales in the UK in the coming year.
The study is based on detailed online interviews with 117 small and medium sized businesses drawn from across the UK and from a mix of sectors.
In general, the study paints a picture of an SME community in bullish mood. Just under half plan to expand into a new area in the next 12 months and a further 37 per cent plan to recruit new staff. More than one in three plan to launch a new product or service and only one per cent plan to scale back their operations. Indeed when asked to state their future optimism, more than 67 per cent of hospitality and catering businesses said they were quite confident about the future of their business, with a further 33 per cent saying they were very optimistic.
Somewhat surprisingly, some SMEs are noticing the effects of the credit crunch on their business, while others are seemingly untouched. For instance, the report showed 28 per cent saying that they are now finding it harder to borrow from the bank, while 38 per cent of respondents admitted to not noticing any difference.
However, there is no doubt that some SMEs are feeling the pressure. For instance, when asked what changes their business had noticed in the last 12 months, the top response (with 56 per cent) was that suppliers had increased their prices. With over half of suppliers increasing their prices, this will have a huge impact on the supply chain, affecting further businesses throughout the UK.
Despite this supplier pressure, many feel unable to increase prices with their own customers, especially as many are facing weakening demand. Only 18 per cent say customers are buying more on credit, and over half of SMEs admit that their customers are more and more frequently looking for deals or asking for discounts.
Kamala Panday, Publisher of Credit Today, organiser of The Credit Show comments: “For some, the credit crunch is beginning to bite. However this survey shows that their hunt for growth has not been affected. Businesses are now playing a more strategic game, with over half admitting to chasing slower payers more vigorously.
“What’s encouraging to see from our point of view is the increasing role that the credit control function is playing with the SME strategy.”
Indeed with over half of SMEs saying that the credit control function has become more important, and with 30 per cent tightening their grip on their credit control function through introducing stricter credit terms, credit issues have never been as important as they are today with SMEs.
Through further analysis of the findings by business age, the report identifies how the value of experience cannot be overestimated. Businesses that have been operating for more than three years, and have perhaps experienced previous tough times, are more cautious about over-stretching themselves and are acting in a more responsive manner. For example, 61 per cent are chasing slow payers more strongly, almost the same number see the control function as an important part of the business, and are far more likely to take non-payers to court than those running younger businesses. On the other hand SMEs who have been operating for less than three years are more focussed on moving into new markets and recruiting new staff.
Kamaly adds: “This is great to see from young businesses. In general, the overall picture is one of optimism, and it’s great to hear of the bullish mood that SMEs are in today, especially as they are such a vital part of the UK economy.”
http://www.credittoday.co.uk/
