According to figures from Baker Tilly, just under 25 percent of Small and Medium Enterprises saw their gross profits fall by 50 percent in 2010-11. The figures were part of research that the SME Distress Monitor compiled using the 2010 accounts of nearly 20,000 SMEs. Of those businesses, almost 10 percent recorded a reduction in sales of more than 30 percent.
One of the partners at Baker Tilly Restructuring and Recovery LLP, Sarah Batchelor said;
“Our research highlights how severely short term debt pressures are mounting for SMEs. As liquidity is tightening, it is essential that business owners take prompt action at an early stage to maximise the financial options available to them, in order to minimise future problems.”
Sarah Batchelor adds that the foreseeable future for business in general and the High Street is concerning, but seeking help and advice in a timely manner is crucial to surviving the current economic situation. The head of Baker Tilly’s Formal Insolvency team, David Hudson, believes that there has been an ‘artificial economy’ in recent months, with the economy appearing to stabilise. However, Hudson believes it is a temporary effect created by quantitative easing and the low interest rates. He encourages businesses to be proactive, and if there are problems in the business to seek advice immediately.
According to the CEO of Company Watch, Denis Baker;
“SME managers must engage in proactive dialogue with their key stakeholders to reassure them, not just bury their heads in the sand and hope.”
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