Growth spurt for SMEs in the third quarter

Finally! Some good news. Small firms are at their most productive since 2007.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
The Business Factors Index, produced by Bibby Financial Services, monitors the progress of over 3,500 small firms across five sectors: manufacturing, construction, business services, wholesale and transport. Turnover across these industries has reached its highest quarterly average for almost five years. Halleluiah!

The metrics are slightly confusing as the index is measured in points rather than percentages. The latest quarter has notched up a total of 105.3, which is pretty impressive given that the last ‘peak’ happened way back in 2007, and that was only 101.1 performance points. Construction and manufacturing are the biggest winners, leaping from 98.1 to 116.8 and 116.6 to 122.0 apiece.

So, how have these firms successfully grown through a downturn? Firstly, by dramatically cutting costs. Supply chains have also been reviewed and streamlined, margins squeezed. On the customer end, prices have crept up. And of course, staff are working longer hours on the same pay.

There is but one cloud in this economic blue sky: chasing late payers. This issue just won't go away. As Edward Rimmer, UK chief executive of Bibby Financial Services, says: ‘Almost one in 10 firms spend more than a week in every month pursuing debts and another 7% are putting aside four to five days on this task.’

There’s also a real disparity between the fortunes of firms based in the north west versus the south east. The latter are happy as clams: just 5% claimed that times were tougher than ever before. Compare this to the disheartening 54% in the north east of England, and the 46% in the north west.

No one is feeling particularly starry-eyed about the future, however. To a man (or woman, even), these entrepreneurs are preparing for the worst – a double dip recession.

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