Recession spawns new breed of business owner

The research, from leading independent invoice financier Bibby
Financial Services, revealed that these ‘super entrepreneurs’ are
evolving because of the downturn, with 79 per cent of small and
medium-sized firms making, or planning to make, positive steps in order
to survive and face economic uncertainty head on.

Cash is king when it comes to this new business breed with 69 per cent
of owners and managers claiming the recession has encouraged them to
keep a closer eye on their finances. With seven in 10 firms
experiencing a deterioration in their ability to access finance, it’s
easy to see why issues surrounding the management of late payment and
improving cash flow top the priority list.

The figures also show flexibility is key to survival with 84 per cent
of owners and managers also making positive changes specifically in
relation to their clients/customers and suppliers. Of those businesses
evolving, over half (56 per cent) have been able to negotiate better
terms with their suppliers, and the same number (56 per cent) have
managed to pursue new business opportunities. In addition, 39 per cent
have become more open and transparent when it comes to their business
plans with clients and customers alike, resulting in a new flexible and
more honest breed of business owner and manager.

However, as well as the positives, many businesses are having to resort
to more drastic measures when it comes to surviving the downturn.
Thirty seven per cent are cutting their marketing or advertising and 33
per cent are even going as far as to use their personal savings to
ensure the existence of their business. Furthermore 28 per cent are,
sadly, scaling back on production and 26 per cent are having to bring
services back in-house. Seven per cent are downsizing premises or
cutting office spend altogether and opting to run the business from
home.

Ed Rimmer, chief executive UK and Ireland for Bibby Financial Services
said: “Regardless of size or industry sector, this research highlights
the flexibility and diversification tactics that British businesses are
being forced to learn in order to survive the downturn. With so many
businesses taking positive steps to adapt to survive, it’s clear that
stronger, more experienced entrepreneurs will emerge from these tough
times. The message to those who are not taking proactive steps is that
this is no time to be complacent – reviewing suppliers, finances, and
in particular cash flow even now may prove vital to the survival of
many of the UK’s small and medium-sized businesses.”

The profile of the new breed of business owner
According to the results of the study, the typical profile of this newly evolved super-entrepreneur is most likely to be:

  • Female
  • Aged between 45 and 54
  • Living in the South East
  • Have started their business between 1995 and 1999
  • Running a business with a turnover of between £250,000 and £500,000
  • Running a business that employs five or more people
  • Experienced in two previous downturns including this one

Indeed, it seems financial prudence divides the sexes when it comes to
implementing change and potentially being fittest for survival in the
future. Seventy two per cent of women are more cautious about their
finances compared to 67 per cent of men, and one in three women says
they have, or will develop, their understanding of financial
management, whereas among their male counterparts this figure is just
one in five.

Experience counts
The figures also show there is no substitute for experience – over half
(54 per cent) of business owners and managers have never experienced a
prior recession or downturn. But it is business owners who have ridden
out past downturns who are more likely to be scrutinising their
finances more carefully, with 81 per cent of business owners who’ve
experienced a number of downturns since the early 1980s paying more
attention to finances compared to just 64 per cent of those who’ve
experienced this recession only. However, 35 per cent of those who
started their business in the last three years know they need to
develop their understanding of financial management.

Ed Rimmer added: “There’s no doubt times are tough for small and medium
sized businesses. Many will simply be fighting for survival rather than
being able to take the time to look at what changes are necessary.
However, even just taking a few minutes a day to look at the business
in a fresh light and explore any potential new survival strategies
could mean the difference between having a successful business in a
year’s time or not.”

With the research showing finance is clearly the key concern for these
struggling businesses, Bibby Financial Services is on hand to provide
flexible cash flow funding solutions and is currently helping more than
3,000 businesses, handling client turnover of more than £3.9billion and
advancing over £300million to help small and medium-sized firms realise
their potential.

Unlike many other institutions and banks which are tightening their
belts to cope with the current economic climate, as the largest
independent invoice finance provider in the UK, Bibby Financial
Services has recently secured a significantly enlarged funding facility
and its doors are very much open for business.

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