Tradesmen face crisis of confidence
One in 10 tradesmen fears going out of business if trading conditions fail to improve in the coming months, according to the latest bi-annual SME Pulse from Aviva.
More than a third (40%) of tradesmen have found trading conditions tougher than they expected so far this year. Nearly half (44%) said that 2011 conditions had been largely as expected and just 16% have actually found this years’ conditions easier than expected.
Nearly a quarter (22%) of tradesmen questioned still believe there is a real danger of a double-dip recession, with 61% expecting business conditions to remain difficult for the rest of 2011.
It is evident from the research that the summer months will provide a vitally important trading period for tradesmen, with over a third (38%) predicting a difficult summer. Furthermore, 7% claim this period alone will determine whether they can continue to do business into the rest of the year.
The Aviva Pulse identifies that confidence among SMEs in 2011 is lower than ever. When questioned, only 13% of SMEs thought the UK economy would see any sign of improvement in 2011, leaving the vast majority predicting difficult days ahead. This represents a 5% drop since autumn 2010, when 18% believed the economy would start to improve in early 2011.
In terms of steps that have already been taken, 29% of those tradesmen surveyed have reduced prices in the last six months - and 12% have recently diversified their businesses, either by offering new products or targeting a new audience. David Bruce, commercial product manager at Aviva comments: “It is evident that the tough trading conditions we saw last year have continued into 2011. Confidence among SMEs is as low as it has been since the onset of the recession and many feel they are in real danger of losing their businesses should the economy fail to improve this year.
“The recent spate of failures on the high street confirms that the consumer-facing economy is feeling a particular squeeze at the moment as discretionary spending falls. Despite this, it’s heartening to see an improvement in sentiment from restaurateurs compared to last year.
“Looking ahead, there seems to be little change in the tactics that will be employed by small business owners to improve trading – we can expect further discounting, increased efforts to diversify into new product and service lines, and regrettably a reduction in staff numbers.”
Although confidence about having the right insurance policy in place has recently improved (in autumn 2010, 16% were ‘very confident’ and 43% ‘fairly confident’- this has now risen to 20% and 53% respectively), there are still those who do not give the issue the attention that it warrants.
Remarkably, 8% of SMEs admitted that they never review the insurance policy in place for their business and 4% admitted they don’t have any business insurance cover - though this is down from autumn figure of 13%. David Bruce continued: “It is encouraging to see the number of businesses with insurance going up as this suggests they are becoming more aware of its importance however, this still leaves too many tempting fate. “As businesses struggle against a difficult economic tide it is only prudent they protect their interests. The day-to-day running of the business can seem like enough of a challenge but it would be nothing compared to recovering from a major event, such as a fire or flood.
“How many businesses have sufficient funds to pay all of the costs associated with getting back to normal – costs such as repairing the premises, paying staff and maintaining orders, themselves? “What is more, there is no need to be an expert on this matter or spend hours on it. The advice is simple - if in doubt speak to a broker. They can help you ensure you have the right cover and help you with advice on risk management which could help you avoid or limit the impact of a major event.”
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