The biggest challenge facing small businesses in 2004 is how to increase sales turnover, according to a survey of small business owners and managers launched today (12th January) by Bibby Financial Services. The survey found that 65 per cent of businesses believe this will be their biggest challenge in 2004.
The results suggest that small firms are bracing themselves for a potentially demanding year as more businesses than ever struggle to increase revenue. In the last 5 years, bankruptcies have increased by a significant 20 per cent and the number of business failures has grown by more than 10 per cent since last year.
The survey also found that despite the stability and buoyancy of the economy, with inflation running at its lowest rate in 30 years and economic growth at 2.1 per cent, owners and managers are not taking anything for granted. Over half (56 per cent) of those surveyed were concerned about maintaining their current level of turnover.
Continuing the theme of finances, the issue of cash flow remains high on the business agenda for 2004. 49 per cent of owners and managers consider managing cash flow and late payment to be a major challenge in the coming 12 months.
Recruitment of skilled staff is another area for concern. Almost half (48 per cent) of those surveyed considered that a lack of the right skills-base may hamper their businessís success in 2004. The problem is particularly acute in the Hotels and Catering sector where, for the second year running, the figure rises to 73 per cent.
According to 70 per cent of businesses within the manufacturing sector, one of the biggest challenges in the coming year will be to find new markets for their products. This suggests that despite growing confidence and increased orders, manufacturers are looking to hedge their bets this year by seeking overseas opportunities whilst taking advantage of the improved prospects in their domestic market.
Coping with Government red tape remains a major bugbear for many owners and managers, however the survey suggests that the situation has improved in the last two years. 43 per cent consider this to be one of their major challenges, down 21 per cent on 2003, suggesting that the message is finally getting through to the Government. This was reflected in last yearís Pre-Budget Statement in which the Chancellor pledged to cut 147 business regulations.
Commenting on the findings, David Robertson, Chief Executive of Bibby Financial Services said: ìOur research reveals an accurate picture of just how small business owners and managers are feeling right now. The economic uncertainties which have plagued the business sector in recent years are all but gone as the UK economy enjoys a welcome period of growth and stability, but entrepreneurs are feeling somewhat cagey about what lies ahead and recognise the need to focus on not only maintaining sales turnover but increasing revenues.
ìThe fact that cash flow management and late payment concerns also top the priority list for small and medium sized businesses demonstrates that owners and managers are increasingly aware of the old adage, ëlook after the pennies and the pounds will look after themselves.í These findings underline the importance of adequate funding to a businessís success.î
Bibby Financial Services can help businesses to improve their cash flow situation by releasing the funds that are tied up in the firmís assets, be they unpaid invoices or plant and machinery. These funds can then be used to help the business realise its plans for growth and move the business forward.
Small firmsí sales fears for 2004
.