SMEs changing course in rough seas

The recession has forced many SME owners' hands, with the majority diversifying to stay afloat.

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Last Updated: 31 Aug 2010

Or so says insurer Aviva, which polled 500 SME owners and found that 56% had consciously taken steps towards diversification - including targeting new customers, launching new products, and trading for longer hours.

Many SMEs are also thinking up new ways to use what they already have. Hence restaurants are hosting weddings, and farms converting to zoos. Sounds like a good idea, but owners should probably make sure not to stray too far from their core business. It's one thing to run an extra service on the side, but if your local Italian is hosting a wedding, hen night or bingo do every other day, you're probably less likely to want to go there for a quiet meal out. Equally the new zoo won't quite have that wow factor if it boasts just a pig, a couple of ducks and a handful of PETA protestors.

It's certainly encouraging to see that Britain's entrepreneurial spirit is alive and well, even if the circumstances which have prompted it are far from ideal. But although the majority of SMEs are trying to tackle the recession positively, the poll also indicates that a sizeable minority have been forced into cuts. Employees are suffering, with 18% of owners saying they have had to cut pay, hours or benefits, while one in 10 have permanently reduced staff numbers.

The poll also found that some owners are taking more risky measures: 12% of respondents admitted that they didn't have any commercial insurance plan in place. Aviva has been keen to highlight how short-sighted this is. Not exactly a surprising sentiment from an insurance broker, but perhaps something to consider when half the adverts on telly seem to be for injury claims lawyers.

Despite the ill-wind, only 2% of SME owners said that they had applied for one of the Government's business assistance programmes. So, whatever measures businesses are taking, the majority clearly have confidence in their own ability to weather the storm...

 

 

 

 

 

 

 

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