Business Link can help SMEs during the credit crunch
Oct 28 2008 by Alison White
The global turmoil shaking our banking community to its roots has been played out in such vivid detail that you would have to be living on a different planet to escape the rollercoaster ride we are continuing to witness on 24-hour news channels across the world.
It makes for painful viewing, yet the true effect of what we are seeing is only just beginning to make its way from the ‘markets’ and the finance houses into your everyday companies already struggling with increased costs and reduced margins.
The true challenge for the West Midlands will undoubtedly fall on our SME community and how it deals with the growing prospect of a fully fledged recession – after all, over 1.14 million people are employed in firms of this size.
I see no value in talking this great region into a downturn. However, we have to be pragmatic. We have to realise that times are tough, finance is no longer freely available and operating costs are rising by the day.
So what is the business community telling us? Whilst we appreciate each sector has its own challenges to face, there are a number of common concerns emanating from every corner of the region, from rural Herefordshire and Shropshire to the major urban heavyweights of Birmingham, the Black Country and Coventry.
Managing debts and cash flow are top of the list for many management teams, with suppliers seeking better terms and customers trying to keep money in the bank for as long as possible. ‘Cash is king’ is a widely used cliché, but very few times has it been more relevant.
This brings us onto the issue of finance and the problems SMEs are facing in trying to secure the investment they need to grow and in some cases survive.
Our advisers on the ground are continually hearing tales of banks reducing overdrafts for customers with an excellent track record and there have even been examples recently of companies with healthy balance sheets being turned down for loans to help them grow. It is exactly this climate that will prevent us from trading out of this downturn.
Other factors we are being asked to help with include human resource issues, increasing sales, marketing, diversification and reducing costs, which can feature anything from improving admin processes to becoming more energy efficient. Our role at Business Link in the West Midlands is to provide companies – both large and small – with the support they need to overcome these challenges and this is exactly what we are doing.
Trading out of this downturn is the only option and Business Link is here to make this happen.
* Alison White is Chief Executive of Business Link in the West Midlands
