Entrepreneurs fighting for survival

Growth will take a backseat to survival for the UK’s entrepreneurs this year, according to the results of Deloitte’s annual Entrepreneurship UK report.

The survey of nearly 300 entrepreneurs from across the UK revealed 20 per cent of firms expect to see no revenue growth in their business in 2009, compared to seven per cent in 2008.

The survey also found that nearly 25 per cent of businesses believe they could cut back on salaries and bonuses.

Ashley Hollinshead, who heads up the entrepreneurial business practice at Deloitte in Birmingham, said: “We are in the midst of exceptional times and the recession has exposed just how much room for improvement there is in many businesses.

“Two-thirds of entrepreneurs claim they have identified areas of potential cost-cutting, yet have not actually gone on to make the required cuts.

“At the same time, just 39 per cent say they know their competitors well and two out of five admit they could do more to improve the quality of their products or services.

“When a recovery appears, the economic environment may be radically different to the past. To stand out from the crowd, entrepreneurs need to make some tough decisions now to be on the front foot when market conditions do recover.

“The opportunity is ripe not just to cut, but to replace one cost with another that is more productive. But many businesses are not cutting costs, limiting their chances of increasing revenues because they are not making improvements.”

In particular, foreign expansion into potentially untapped markets has rapidly slipped down the list of priorities as entrepreneurs take a more cautious stance, avoiding potentially costly drains on company resources in turbulent markets. Indeed, nearly two-thirds (62 per cent) of companies say the UK offers them the best opportunity for growth in the next three years.

Simon Millington, founder of Birmingham-based online retailer Sports Plc and a Deloitte client, is benefiting from taking a different approach to many entrepreneurs, focusing his efforts on expanding his business in Europe and the USA.

“Like the entrepreneurs who took part in this survey, I do believe the UK market will make a strong come back but for us, making sure we are in an influential position in other markets in Europe and the USA is every bit as important.

“Our sales have increased this year and we have grown our workforce by 50 per cent to meet this demand.

“We continually monitor costs in good times and tough ones and we have certainly used economies of scale to reduce costs in key areas for us.

“The tough climate this year has been a great opportunity to shave costs as competition from suppliers intensifies.

“But we try to run our business as efficiently as we can and any further cost-cutting would be at the expense of customer service, which would no doubt only take the business backwards.”

Sports Plc is a family business, which Simon runs with his wife Suzanne and their two sons, James and David. To date in 2009 its operation is up 50 per cent compared to 2008 and its US operation is up 20 per cent.

“We feel it is imperative to continually strive for improvements in quality of product and overall customer satisfaction because one thing is for sure – the competitors trying to catch us up will be doing just that,” said Simon.

“Being an online business has also clearly helped as the credit crunch has prompted people to look for better value from their purchases, further boosting the growth of internet shopping.”



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