Mood positive despite recession's impact

BUSINESSES in Suffolk and North Essex are feeling the effects of the recession with falling profits and a desire to cut costs further, according to the latest Business Life survey undertaken by chartered accountants and business advisors Larking Gowen in conjunction with the East Anglian Daily Times.

BUSINESSES in Suffolk and North Essex are feeling the effects of the recession with falling profits and a desire to cut costs further, according to the latest Business Life survey undertaken by chartered accountants and business advisors Larking Gowen in conjunction with the East Anglian Daily Times.

However, the majority do see positive things coming out of the recession.

This annual survey seeks the views and opinions of business owners in Suffolk and North Essex, the results of which are sent to Larking Gowen's panel of “Wise Men and Women” for their comments. Their thoughts also appear on these pages.

One encouraging statistic is that 40% of respondents have been in business for over 20 years, indicating they have successfully survived previous economic downturns.


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There has been a lot of talk about the banks and how, despite many now being in public ownership, they remain reluctant to lend money or extend overdrafts.

A significant minority, 18%, said the credit crunch had impacted negatively on banking relationships. A third said they would not even bother to ask for a further loan or overdraft extension, and felt they would be unlikely to get it. However, 40% thought extra funding would be still available to them.

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They say cash is king - well 49% report their cash flow being “just about OK” while 11% were experiencing problems.

There is no doubt profitability has been hit, with 41% reporting a fall in the last 12 months with a similar figure predicting a further fall in the coming year. A fifth of respondents claim to be bucking the trend by expecting rising profits next year.

However, there is a more usual reflection of the current economic situation with, 58% looking to cut costs, with marketing, staffing and travel being the biggest areas under threat.

This is somewhat contradicted on a question which was specifically about employment as only 9% expect to lose staff over the coming year whilst 12% predict their head count will increase.

One interesting statistic is the number of respondents who indicated that a rise in the national minimum wage to between �12,000 and �13,000 a year would have a negative impact on their business - 42%. Since the survey was conducted, it has been announced that the next rise will breach the �12,000 mark for an adult on a 40 hour week, so this could exacerbate the staffing problems mentioned above.

There was little to cheer the Government as 79% thought Gordon Brown was the not right person to lead the country out of the recession and 86 per cent did not think the Government had introduced enough effective measures to help businesses through the downturn.

If you are looking for any light at the end of the economic tunnel, you may need to have considerable resolve, as respondents think it is still someway off. A third believe the recession will last for up to two years and just 19% see it being finished in the next 12 months.

A full copy of the survey is available at www.larking-gowen.co.uk

Larking Gowen is registered to carry on audit work by the Institute of Chartered Accountants in England and Wales. Authorised and regulated by the Financial Services Authority.

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