SMEs worried over the immediate future

Almost 10 per cent of small UK firms have expressed concerns about their ability to continue trading.

That is the finding of the latest bi-annual SME Pulse survey from insurers Aviva.

The survey outlined worries that the economy needs to pick up soon if the small business community is to thrive.

Just 13 per cent of the SMEs polled thought the UK economy would see any sign of improvement in 2011, leaving the vast majority predicting difficult days ahead.

This represents a 5 per cent drop since autumn 2010, when 18 per cent believed the economy would start to improve in early 2011.

Some 37 per cent reported trading conditions as tougher than they expected so far this year, a trend that has continued from autumn 2010 after 39 per cent experienced similarly challenging trading conditions.

Over a quarter of SMEs (28 per cent) thought that there is a real danger of a double-dip recession.

However, the study also identified the steps that many smaller firms are taking to combat the effects of onerous trading conditions.

Nearly a quarter of those firms surveyed have cut prices in the last six months, and a fifth have diversified their operations by creating new products or by targeting new customer bases.

David Bruce, commercial product manager at Aviva, commented: “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.

“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.”