West Midland small firms are stockpiling cash

Jul 15 2008

More than three quarters of SMEs in the West Midlands are stockpiling their cash as they are too nervous to invest in the current economic climate, according to new research.

Just under 80 per cent of business owners surveyed by Bank of Scotland Business Banking said they would rather hold on to their cash rather than make any immediate decisions about investing in the business.

Over the next 12 months, about four in ten plan to put aside money for future investment in the business whilst slightly more plan to put aside money in savings to earn interest.

But a quarter of small business owners in the West Midlands are planning to put aside money for insurance against hard times and a further worsening in economic conditions.

In total, Britain’s small business owners are currently saving an estimated total of more than £1 billion every month.

Peter Wood, head of strategy and products at Bank of Scotland Business Banking, said: “In a more cautious economic climate, where saving is prioritised over investment, it’s vital that SMEs find the best home for their surplus cash.

“Making the right investment and savings decisions can make a huge difference to the bottom line of any business, particularly SMEs where the line between profit and loss can be marginal.”