By Max Clarke
The impact of the recession is levelling out for London based businesses, a new report by Business Link in London shows.
The findings from Business Link in London’s Business Confidence Index (BCI) survey which gathered economic insights from nearly 3,000 London businesses between October and November 2010, show that just under three-quarters of businesses (72%) are still feeling the pain of the recession. This is consistent with findings from the previous BCI’s findings in February 2010, indicating that the much-anticipated recovery is taking longer to materialise than expected for London’s businesses.
The findings show that 1 in 10 London based businesses are still extremely affected by the recession. Also, the survey indicates that younger entrepreneurs are feeling the impact of the recession less than their older counterparts with over half (52%) of 45-54 year old business owners stating they are extremely affected by the recession compared to 40% of business owners aged under 34.
The Business Link in London BCI survey highlights that many business owners are considering making further changes to deal with any future pressures resulting from the recession. Nearly a third of businesses (31%) are choosing to focus on core products and services with fewer businesses delaying capital expenditure or putting investment plans on hold. Despite recent increases in VAT, this indicates that business owners are gaining confidence in planning for investment.
Andy Berrow, Operations Director, Business Link in London comments: “Findings from the survey indicate business owners are feeling positive and gaining confidence. Overall we’re seeing far more strategic decisions coming from the SME community to try and counter the way the recession affects their business.”
Further suggestions of confidence re-emerging can be seen when the findings are compared to February 2010, as fewer businesses are now keen to cut prices with just under a third (30%) currently considering this option compared to 36% almost a year ago. Also 27% of businesses are planning to introduce new products in efforts to achieve growth compared to just 21% in February 2010.
When it comes to the main issues causing greatest concern to London business owners; just under a fifth (16%) of those surveyed said that generating and winning new business was a key issue showing that generating greater revenue returns is the main barrier for business growth. Reduced consumer spending is also cited as a key problem, with over a quarter of the businesses (26%) surveyed highlighting this as an issue.
Andy Berrow comments: “The survey shows that in particular, food & drink businesses are struggling from the impact of reduced spending by customers with nearly half (46%) of this sector highlighting this as an issue, well above the capital’s average of 26%. This is not surprising considering the current economic climate. The other major sector affected by this issue is retail who face similar problems to the hospitality sector in terms of reduced disposable income available to customers.”
Despite the long tail of the recession’s impact, the survey found that growth remains a huge priority for over three-quarters of London’s businesses (78%) and over half of owners (57%) expect to achieve this with women business owners in particular, seeking growth. Over the past year, the capital’s female business owners have seen their companies grow by 7% more than their male counterparts.
The key driver for business growth over the past year seems to be new product development, with 37% of business owners citing this as a priority. Whilst 29% of business owners believe installing an effective sales strategy has helped drive growth but one of the most striking findings from this BCI is that over half of London businesses surveyed (54%) had failed to put a marketing plan in place.
This is where London’s businesses need to act quickly and strategically says Andy Berrow: “The lack of a marketing strategy is a key issue for London businesses and 37% of business owners surveyed admit to not seeing the benefits of a marketing plan. With economic uncertainty prevailing, having a specific plan in place can certainly help a business to grow and give owners that vital competitive edge.”