According to IMRG online retail sales increased by 9% month-on-month and by 19% year-on-year, slightly down on the previous comparison.

Official, albeit trial, statistics from the Office of National Statistics showed 14% growth in internet retail sales as a proportion of total retail sales in March to reach 3.4%, some way down on the Novemberr 2008 peak of 3.8% no doubt prompted by Christmas bargain-hunting.

Nevertheless, large e-commerce and online retail sites have also reported strong growth.

Asos, the online fashion retailer, saw sales climb an impressive 104% in the 12 months to end of March 2009.

Nick Robertson, chief executive of Asos, said:

We are not immune to the prevailing economic conditions, however, as widely reported, younger fashion is proving more resilient, internet shopping continues to gain in popularity and our international sales are being bolstered by the weak pound.

Meanwhile Amazon announced sales growth of 18% to $4.89 billion during the first quarter of the year.

Good news for online retail. More reasons why smaller businesses must have an online sales channel.

[Picture credit: jurvetson licenced from Flickr]

UK economic activity is expected to contract by 3.3% and unemployment reach 2.9 million by the end of the year.

And no respite is expected in the first half of 2010 according to the  group which represents over 200,000 British businesses.

It believes there will be six quarters of negative growth in the economy before fledgling recovery begins in 2010.

Nevertheless the first quarter of that year is expected to see unemployment breach the 3 million mark and growth remain elusive with a 0% increase in Gross Domestic Product (GDP).

The third quarter of 2009 also looks set to see inflation hit negative territory of -0.1% thanks to the rapid impact of the recession, falling fuel prices and the 2.5% VAT cut.

All this negative macro-economic data suggests businesses will scale back spending with a fall in investment predicted to be 9.2% in 2009 and 1.7% in 2010.

Nevertheless, Richard Lambert, CBI director general, while pessimistic about the outlook for the next 12 months, believes there is some hope:

During the second half of the year the impact of interest rate cuts, falling inflation, the relative weakness of Sterling, plus the fiscal boost, should start to have a stabilising effect.

Once again it seems the freeing up of credit will be at the heart of how well or otherwise British firms manage this recession.

[Photo credit: napalm filled tires licenced from Flickr]

The CBI’s Access To Finance Survey claims that 60% of small and medium-sized businesses have reported an increase in the cost of new finance.

Banks are shifting to offering loans products based off a LIBOR rate, rather than bank base rate which is partly to blame for the rise in the price of borrowing.

Well over half of the SMEs surveyed (57%) said they had already cut back on capital investment as a direct result of the credit crunch.

Staff cuts had been implemented by 27% and output reduced by 32%.

Ian McCafferty, the CBI’s Chief Economic Adviser said:

This survey clearly shows that obtaining investment capital is most challenging and that the credit crunch is affecting firms’ ability to operate.  It is not surprising that some firms have started taking pre-emptive action to safeguard their longer-term future.

These figures should be considered, however, with some caution.  Only 134 firms of all sizes responded to the CBI survey, which is well below statistical validity, particularly when this sample is divided into SME, large and corporate business segments, as it is.

Nevertheless, these data do reflect the anecdotal sentiment and more rigorous data found in other surveys reported over the last few months.

[Picture credit: stuartpilbrow licenced from Flickr]

The move brought a glimmer of a smile to the lips of most small business groups, but a political row erupted about whether the £10 billion working capital scheme was enough.

Unveiled by the Department for Business, the £10 billion working capital scheme is aimed to ensure viable, growing companies are able to get their hands on the credit they need to continue trading during the downturn.

In an interview with the BBC, Business Secretary Peter Mandelson made it clear there was a risk to the tax payer and some businesses supported by the scheme could go bust.  He said:

We’re making provision for loan defaults … there will be some risk, but less risk than some might imagine because the firms we will be supporting are not high risk.

In addition to this scheme aimed at medium-sized enterprises, the government announced an Enterprise Finance Guarantee Scheme securing a further £1.3 billion of bank funding for smaller businesses with a turnover up to £25 million.

Finally, a Capital for Enterprise Fund will include £50 million from the government supplemented by £25 million from the banks to buy shares in growth businesses that need to convert debt into equity.

Phil Orford, chief executive of the Forum of Private Business, expressed the view of many by welcoming the package of support, but added:

… it must be followed up by longer-term measures to support small businesses and stimulate the economy, including tax cuts and similar strategies to boost struggling sectors.

Meanwhile the Federation of Small Businesses reported that more than a third of its 210,000 members had to dip into savings to the tune of £900 million in order to survive recent months without credit.  It also reported that overdrafts had been reduced by £100 million in October/November last year.

FSB chairman, John Wright, said:

The onus is now on bank branch managers to actively promote this money to its small business customers to ensure their survival and the revival of the economy.

The Conservative party argued, however, that much more was required to support credit to SMEs.  It reiterated its proposals of a week ago that a £50 billion stimulus package was in order.

Others including the Liberal Democrats wondered why additional guarantees were being offered to the banks on top of the huge sums taken from tax payers’ pockets at the end of last year.

Whatever the specifics some kind of action in the face of a dramatic downturn is clearly required to support UK small and mid-sized businesses.  Whether it will be enough, remains to be seen.

Details of the relevant support schemes can be found at the Business Link website.

[Picture credit: Johny hanging head down from the tree, licenced from Flickr]

This year on year increase has been seen across all regions of the UK and across all sectors.  While cetain sectors like construction predictably continued to suffer badly, failures up 48%, sectors that had previously proved resilient were also in trouble.

As Neil Munroe of Equifax says:

In particular, the Transport & Communications sector had been faring fairly well until the last couple of months when a 47.2% increase year on year has been recorded.  This is probably a direct consequence of the slowdown in the manufacturing and retail sectors.

The region of the UK to feel the harshest effects in terms of business closures was the East Midlands, which saw a 40% rise in businesses going bust during October and November.

[Picture credit: PaulDWaite licenced from Flickr]

The move comes following mounting pressure from government and small business lobby groups for the banks to do more to support their SME customers as the credit crunch continues to cause headaches.

A survey released today by the Federation of Small Businesses (FSB) shows that 30% have seen an increase in the cost of new or existing borrowing over the last two months.

As a result the FSB plans to confront the ‘scrooge-like’ tactics of the banks at the next meeting of the government-backed Small Business Finance Forum which takes place today.

Banks have come under heavy criticism for not passing on recent interest rate cuts to customers.  Nevertheless, Lloyds TSB last week announced it would do just that and its new partner HBOS also promised to make lending to SMEs easier.

But bank lending to SMEs is not just about base rate.  Most borrowing is priced at base rate plus a percentage margin to reflect the relative risk of the loan.  This is where banks could widen their margins, if not watched closely.

Mark Hemingway, head of retail media relations at HSBC, said on this point:

We’ve passed on bank base rate reductions in full to our SME customers and we’ve not extended the margin above base which we charge for borrowing, although that figure varies on a case-by-case basis.

It’ll be interesting to see quite how much of this extra bank borrowing UK small businesses are likely to use.

HSBC alone has 1 million UK SME customers.  The £1 billion therefore represents an extra £100 to ease the working capital headaches of each firm.

Nevertheless, the HSBC move is to be welcomed.  It’s good to see banks recognising that small businesses are going to dig us out of the hole our giant financial institutions have in part created.

[Picture credit: jonboy mitchell licenced from Flickr]

Just over half of the small businesses surveyed (52%) considered the credit crunch would have a negative impact on their business.

Hardly surprising then, that the single most important factor for 37% of small businesses was that the government should do more to ensure banks keep up lending levels to viable SMEs.

The second most popular plea to government from 24% of those surveyed was for tax cuts to encourage growth.

Growth seems to be at the heart of concerns with nearly half (49%) seeking funding for growth, but 80% of them finding it extremely difficult in the current environment.

UK SMEs are now clearly suffering the double whammy of a severe shortage of available lending combined with the impact of the ‘real’ world economy heading into recession.

The irony is that the last time anyone can recollect the big banks making a loss was during the 1980s when unwise lending to small businesses was primarily to blame.

With a new found lending conservatism it is perhaps unsurprising that the British Bankers Association (BBA) today greeted Mandelson’s exhortations with caution.

BBA chief executive Angela Knight was quoted by Bloomberg as saying:

We have to be clear that as talk turns to recession it seems inevitable that some businesses will not survive, even with the best assistance that banks, government and voluntary agencies can give them.

A BBA spokesperson later said to me that ‘you can’t pretend the world is in the same place it was 12 months ago’ and as a result banks would be more cautious in their lending to SMEs.

This sudden lending prudishness by the banking industry is at once a good thing, but also counter to the spirit of moves to save normally viable businesses from abnormal times.

Anything that can be done right now to make recession for Britain’s small businesses shallow and short, rather than long and deep, is going to benefit us all, including the newly part-nationalised banks.

At a Northern Regeneration Renewal Summit in Manchester today, Business Secretary Mandelson outlined how important he believes the Regional Development Agencies (RDAs) will be in delivering the ‘Solutions for Business’ support package announced earlier.  Mandelson said the RDAs’ mandate is clear:

to ensure that every hardworking business, in every region of the country has the necessary advice and support to help them not just to survive but also to succeed in the difficult times ahead.

What’s not clear in detail is how the RDAs will practically role out additional support measures.  In addition, you might also argue that the mandate for RDAs hasn’t changed at all.

Further details have emerged which clearly mark Business Link as the delivery point for various ‘Solutions for Business’ products which are to be simplified from 3,000 products/services down to 100.  This attempts to counter criticism about the complexity of delivery of support to SMEs.

Both the CBI and the Federation of Small Businesses (FSB) have broadly welcomed recent government measures for SMEs.

Nevertheless a number of features of the the new package involve initiatives like Train to Gain, and Business Link Health Checks which were all launched some while ago, as was the commitment to radically simplify the system.

There is also a sense that the value of government support offered to Britain’s small businesses may be inadequate.

As a result, the FSB yesterday set out a blueprint for a £1billion ‘Small Business Survival Fund‘, a figure which dwarves most estimates of the government’s new spending on an SME support package.

[Photo credit: Flickr World Economic Forum]

But the small year-on-year increase of 0.5% masks trouble for out of town superstores.

Year-on-year figures for out-of-town shopping fell by 3.1% in September, suggesting larger purchase items are becoming less appealing and the price of fuel is helping to persuade people to shop more locally.

Despite what could be one last impulse buying spree by the Great British public, Experian predicts the next 12 months will prove to be a very rough ride for most retailers.

Although the Footfall Index suggests people are spending less time visiting out of town DIY stores, Hitwise data shows online retailers may be taking up the slack.

Property websites have seen a steep falls in visitors lately, but home and gardens sites have seen traffic increase by over 20% in the last 12 months.

[image with thanks to ralphbijker @ flickr]

The annual consumer prices index (CPI) rose to 4.4% in July 2008, up from 3.8% in June the largest single rise since official records began in 1997.  The biggest single contributing factor to the jump in inflation was a 12.3% rise in prices of food and and non-alcoholic beverages.

Agricultural commodity prices have increased significantly.  Meat prices rose 16.3% year on year and bread and cereals by 15.9%.

Rises in petrol prices and the cost of air paseenger transport also had a part to play in pushing the CPI upwards.

The retail price index (RPI) rose to 5.0% in July from 4.6% in June.  The upward pressure on RPI was dampened by figurs for house price depreciation which are excluded from the CPI.

David Kern, economics adviser at the British Chambers of Commerce said:

The rise in July annual CPI inflation was slightly higher than expected. But the new figures do not yet take account of the recent large falls in oil prices. Lower than expected producer prices support our view that CPI inflation will reach its peak within the next two or three months.

1. Decide whether it is worth a fight.

2. Consider your customer.

3. Assess why the customer has refused to pay.

4. If the customer does not have a good reason for not paying, you may choose to use a debt collection agency or a solicitor specialising in debt collection.

5. If you opt for debt collectors, ensure you make checks before using an agency.

6. For debts over £750, you can issue a statutory demand.

7. Opting for the Small Claims Track is useful and inexpensive in pursuing debts of up to £5,000.

8. Remember that the real winners in debt recovery are often the lawyers and debt collection agency.

9. Review your contracts.

10. For further information on debt recovery, use a chartered certified accountant.

Useful perhaps, but you’d think ACCA might have come up with something a little more incisive and in depth.

There were 3,210 liquidations of which 1,085 were compulsory a decline of 22% on the same quarter a year ago, while voluntary liquidations rose by 25.4% on a year-on-year basis.

Although these statistics will be seen as another grim portent of things to come, the proportion of companies entering liquidation compared to active companies was just 0.6%. A figure that has remained unchanged since the corresponding period in 2006.

[Picture courtesy of timetrax23]

Good weather during April (I didn’t notice, Ed) and the timing of Easter are also credited with the small apparent upswing in shoppers.

However, Jonathan Foster, retail analyst at accounts Ernst & Young, said:

Despite slightly higher shopper numbers than expected in April, the outlook remains gloomy for the retail sector. We’re not only seeing a record number of profit warnings (22 so far this year from the FTSE General Retailers Index), but an alarming number of retail companies are also falling into administration.

Data also released this week by the British Shops and Stores Association (bssa) revealed disappointing Easter trading among reatilers, down 0.2% during Q1 compared to the same period last year.

There seems nevertheless to be a polarisation of performance according to bssa figures. The best performing retailers (45% of the total) showing a rise in performance of 13.4%, while the remaining 55% saw an average percentage decrease of -11.4%.

This data suggests that rather than recession, perhaps there’ll simply be a shakeout on the high street as weaker players find less support from the credit cards of carefree shoppers.

[Picture thanks to: Dr Max]

Events are being put on throughout the week by enterprise agencies around the country. Keep an eye out in your local area for more information.

The NFEA points out that now is the time to focus on key business disciplines such as realistic forecasting, contingency planning and financial control as well as concentrating on relationships with customers and suppliers.

Arguably these are all things we should be doing all the time, but if the credit crunch is an excuse to refresh best practice, then whatever the economic reality, so be it.

Experian data reveal 4,798 businesses failed during the first quarter of 2008, up 8.5% on the previous ear.  It’s also the second highest single quarter jump in failure rate since Experian started recording figures in 1997.

Tony Pullen, managing director of Experian’s business information division, clearly believes this may be the thin edge of an increasingly precarious economic wedge.  He comments:

These figures are hugely significant, highlighting the impact the continued credit crunch is having on businesses across the UK.  It’s the first overall increase in failures that we’ve seen for 12 months and demonstrates the nervousness there is in the economy.

The banking/financial services and property sectors appear to be taking the brunt of the pain, unsurprisingly. But failures in agriculture (up 109%), food retailing (up 35.9%) and textiles and clothing (up 29.8%) sectors are also of concern.

By far and away the most affected areas of the UK are Northern Ireland which saw Q1 business failure rates rise by 51.9% and the East Midlands which saw a 53.6% increase.

Whether or not these latest figures represent a trend or a blip, it’s likely that most businesses will be looking to exercise caution when it comes to assessing their risk exposure to certain types of customers.

Free to download from the ICM site is a ‘Combating the Crunch’ leaflet which highlights four key tips for credit management within smaller businesses.

The leaflet is launched in conjunction with a new web portal www.creditmanagement.org.uk designed to provide relevant information to credit management practitioners in businesses large and small.