SMEs find falling demand creates greatest distress

The business owners behind Britain’s small and medium-sized enterprises (SMEs) have said that their biggest cause of business distress is a downturn in demand for their wares.

In a survey carried out by commercial debt recovery solicitors, Lovetts, business owners across the UK were asked to rate different economic factors according to how important they were for their businesses. The primary issue was found to be falling demand, followed closely by economic uncertainty, then by competition on pricing.

The managing director of Lovetts, Charles Wilson, said that they were a “troublesome trio” of issues, but not entirely surprising.

“Customers are hard won and prices are being driven down which means margins are being squeezed. In essence, many businesses are running to stand still,” he said. “It’s at times such as this that keeping a focus on cash flow is paramount to help cope with the uncertainty in the market and put the business on firm footing if demand does fall.”

The survey showed that financial matters were not considered to be as important, with currency exchange rates, VAT increases and taxation and national insurance not rated by the majority as being significant problems.