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Sales/Revenue

The current economic situation is clearly not just a credit crunch; its effects are being felt in the real economy. Almost two-thirds of businesses surveyed reported a fall in sales/ revenue in the previous three months. Of these, 38.4% of respondents reported that their sales/revenue had decreased somewhat in the previous three months, and 22.5% said their sales/revenue had decreased greatly. Only 23.2% said theirs had stayed the same and 13.8% said sales/revenue had increased in the previous three months. There was some noticeable variation between the business size groups. Small businesses recorded figures of 31.1%, 29.6% and 23.5% for stayed the same, decreased somewhat and decreased greatly respectively. For medium businesses the figures were 20.4%, 44.3% and 23.4% and for large businesses the figures were 21.1%, 42.3% and 23.4%.

Business Plans for Expansion

Prior to the current economic situation, many businesses had plans for expansion. The survey sought to find out if growing businesses had curbed their expansion plans. This has important ramifications not only for the current economic situation, but also for how the economy will emerge from it. The survey asked respondents whether or not they had plans to expand their business prior to the credit crunch. Those who indicated that they did have plans to expand were asked to indicate what had happened to those plans following the credit crunch. Almost four-fifths (77.5%) of the businesses surveyed had plans for expansion. A third of those with plans for expansion had not changed or had even enlarged them. The remaining two-thirds of businesses with plans for expansion had scaled them back (28%) or put them on hold (37%).

Business Responses

Businesses were asked if they had responded to the current situation and how they expected to respond in the future. Businesses were asked to indicate which among six different factors had increased, decreased or stayed the same in the previous three months. The results for each are outlined below.

Number of employees

In total, 35.2% of the surveyed businesses answered that their number of employees had decreased in the previous three months. Conversely, 8.0% had increased their staff. However, when looked at by business size, there is considerable variation. The responses from small businesses show that 20.5% reduced their employee numbers, whereas 74.7% of businesses kept employment numbers the same. There had been much more employment contraction in medium-sized businesses (39.3% of businesses) and large business (47.2%) had decreased their employee numbers in the previous three months.

Hours worked by employees

Slightly fewer businesses (31.5%) had reduced the hours worked by their employees; 59.1% of all respondents said that hours had stayed the same. There was again variation between the employee size groups, with the percentage of businesses that decreased their employee working hours 27.3%, 32.3% and 35.3% for small, medium and large businesses respectively. Employment adjustment is clearly more marked in larger businesses.

Advertising/Marketing

One way in which businesses may respond to reduced credit and cash-flow is to focus their expenditure on current liabilities and reduce their expenditure on investment. Almost one-third of the businesses (32.3%) surveyed said they had reduced their advertising and marketing expenditure in the previous three months (49.7% of all respondents say that theirs had stayed the same, and 18% said that it has increased).

Other business expenditure

The reduction in expenditure was even more marked in "other business expenditure". More than half (53.3%) of all the surveyed businesses answered that their other business expenditure had decreased in the last three months. 37.0% said it had stayed the same and 9.5% said that it had increased. The largest proportion of businesses reducing other business expenditure were among large businesses, where almost two-thirds reported reductions (64.7%). It was smallest in small businesses, of whom 41.6% had reduced other business expenditure.

Credit provided to customers/clients

64.1% of all respondents answered that the credit they provided to their clients/customers had stayed the same in the previous three months. 21.1% said it had decreased and 14.7% said that it had increased. This was relatively consistent across the business size groups.

Prices charged

A quarter (24.9%) of all of the businesses surveyed said that they had increased their prices in the previous three months. 60.2% said they have stayed the same and 14.9% said that they have decreased. By size, 28.9% of small businesses said their prices have increased, 24.8% of medium businesses said theirs had increased and 20.9% of large businesses said theirs had increased. The figures are relatively similar for prices staying the same. However, the proportions diverge again when the percentages of businesses who said their prices had decreased are compared – 10.2% (small), 15.2% (medium) and 20.9% (large).

Expectations of the Future

Businesses were asked to indicate how they expected the same six factors to change for their business in the next six months to a year.

Number of employees

Businesses, and small and medium ones in particular, were a little more sanguine about the six months to July 2009 than they were about the previous three months. Nevertheless, a quarter of businesses expected their number of employees to fall. The percentages for each group are shown in the table below.

58.5% of businesses surveyed believed that the hours worked by their employees would stay the same over the next six months to a year. 27.2% expected them to decrease and 14.3% expected them to increase. The figures for the different employee size groups are presented below.

Advertising/Marketing

During the next six months to a year just under half of the businesses surveyed (49.6%) believed that their advertising/marketing levels would stay the same. 23.7% believe that they would decrease and 26.7% that they would increase. There was some variation between the employee size groups, with 55.0% of small businesses believing their levels would stay the same, compared to 45.1% of medium businesses and 48.6% of large businesses. 20.6% of small businesses thought their levels of advertising/marketing would decrease, whilst 25.6% of medium businesses and 24.9% of large businesses thought the same.

Other business expenditure

Similar differences were seen when businesses were asked how they thought their other business expenditure would change over the next year. Overall, 46.4% thought their expenditure would decrease, 41.2% thought it would stay the same and 12.4% thought that it would increase. The table below shows the differences that emerged when the surveyed businesses are assessed by employee size groups. Again, it was the larger businesses that were the most pessimistic about their expenditure in the future, with almost two-thirds of them expecting non advertising/marketing business expenditure to decrease.

Credit provided to customers/clients

64.8% of businesses surveyed believed that the credit they provide to their customers/clients would stay the same over the next six months to a year. 27.3% thought that it would decrease and 7.9% thought that it would increase. There were again divergences between the different sized businesses, with the most pronounced being for the medium-sized group. This is outlined in the table below.

Prices charged

Just over half of the businesses surveyed (52.9%) answered that they expected their prices to stay the same over the next six months to a year. 15.2% thought their prices would decrease and 31.9% thought they would increase. The table below outlines the differences between the employee size groups.

Information Sources

Businesses were asked to identify their main sources of information on the economic situation. 62.3% of respondents identified general media and other information providers as their main source of information. This was followed by economic or business commentators (55.0%) and discussions with associates in the same industry (46.4%). Fewer than a quarter (22.7%) of respondents said that they sourced their information from financial projections for their own business. There were, once again, differences between the different employee size groups and these are outlined in the table below.