More aid needed for small firms

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A SHEFFIELD insolvency expert is calling on the government to do more to help small firms after research showed small and medium sized enterprises are in greater distress than big business.

The call comes from Gareth Self, a member of the Yorkshire committee of the Association of Business Recovery Professionals, R3, and an insolvency practitioner with the P&A Group.

According to R3, five times more SMEs than big firms have seen sales volumes fall and more than one in three SMEs have suffered a fall in profits, compared with fewer than one in five big companies.

“The Government has created a number of schemes to support SMEs as they are vital to the health of the economy, but it’s clear that further help is needed if they are to survive this difficult economic environment,” says Mr Self.

“For a region like Yorkshire with a high proportion of smaller, family-owned businesses, it will be crucial that this sector undergoes a real recovery in 2012. More support is needed over the coming year otherwise more businesses will inevitably fail or else continue to limp along, damaging competition.”

R3 says Northern businesses – including those in Yorkshire - appear to be fairly resilient and are showing levels of distress similar to the national average.

Its research found 35 per cent of Northern businesses suffered decreased profits, just slightly higher than the UK average of 34 per cent; and 20 per cent made frequent use of their maximum overdraft facility compared with 17 per cent nationally.

Although, 21 per cent of Northern businesses reported growth in market share, higher than the national average of 17 per cent, Mr Self warns this could be the calm before the storm.

“Many ‘zombie’ businesses have been surviving but not thriving and we know that businesses do not fail in the middle of a recession, but when the economy is recovering,” says Mr Self.