Entrepreneurs fail to axe costs as growth stalls

Annual survey of entrepreneurship in the UK exposes weaknesses businesses must put right, if they are to survive the recession.

By News Desk
28th July 2009 at 0:31

Entrepreneur UK 2009 - the axe must fall furtherSurvival, not growth is the mantra of British businesses in recession according to the latest annual Entrepreneur UK report from Deloitte which suggests the axe must fall further to cut costs to the bone.

According to the report released today, just over one fifth of firms see no prospect of revenue growth during 2009.

Meanwhile 98% of entrepreneurs and business owners recognise their companies have weaknesses which could readily be spotted and exploited by competitors.

Commenting on the report, Dragon’s Den entrepreneur James Caan takes a Darwinian view:

… after six or seven years of uninterrupted economic growth, companies have become a little complacent. Many have not done enough to improve the quality of their services or products. The market has now moved on and only the best will survive.

A failure by many businesses to slash costs hard enough and deep enough is one of the report’s biggest criticisms.

Two thirds of businesses have identified areas where costs could be cut, but haven’t got around to implementing them yet.

Four out of ten say, if a new owner took over, they’d immediately find it easy to reduce head count and admin costs as well as salaries and bonuses.

Despite the potential benefits of expanding overseas with the pound relatively weaker against other currencies, looking to international markets for growth is not a priority for most.

Nearly two thirds of companies (62%) say the UK offers them the best opportunity for growth over the next three years.

All of which adds up to a slightly bemusing picture. It seems bizarre that so many businesses would have spotted competitive weaknesses and opportunities to cut costs and done nothing about it.

We’d be really interested to know how your business is reacting to the recession. Are you cutting costs? Are you fixing competitive weaknesses? Or are you just keeping your head down and surviving?

[Picture credit: Darren and Brad licenced from Flickr]

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  1. J Turner says:

    The problem here is that for many individuals, our costs have hardly fallen although in a recession they should – and why haven;t they fallen? Because we have borrowed from the future to prop up inflated housing prices … let house prices fall – and encourage renatl prices to drop and there will be slack available to cut salaries and bonuses …

  2. News Desk says:

    Ironic that excessive borrowing got us into this mess and yet those with existing loans are seeing their costs fall with interest rates.

    For sound businesses wanting to borrow now, the cost of borrowing appears to be rising.

    Seems wrong.

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