The research of 876 businesses conducted on behalf of Bibby Financial Services found that 12% were spending three days or more a month chasing late payers.

These figures support data released earlier this year by payments system BACS which showed SMEs are owned £25.9 billion, up 40% on 2008.

In order to cover the shortfall created by delays in payment, small businesses are resorting to bank overdrafts (20%), loans from friends (10%) and family (10%), drawing on savings (5%) and in some cases using personal credit cards (3%).

All in all disappointing that more businesses of all sizes aren’t recognising that paying promptly is going to benefit all of us, but a sign of the times.

[Picture credit: laRuth licenced from Flickr]

Here’s a quick round up of a few you might want to think about entering or voting in.

First off there’s the annual O2 X awards for UK businesses with 1-50 employees that have done something daring, different or unique. Details online from the above link with a closing date of 1 August 2009.

Next up there’s the Techcrunch Europas, a celebration for all things web startup throughout Europe on which you can vote. If you want to vote for your favourite be quick, as winners are announced next Wednesday 9 July.

For businesses with an eye on international trade with China there’s the Cathay Pacific China Business Awards. These aim to recognise successful British businesses in the region. Entries to be submitted online by 31 October 2009.

Finally bringing awards right back down to a local level, we’ve just heard about the Martin & Audrey Wood Enterprise Awards launched by Oxford Innovation. The awards celebrate hi-tech startups in Oxfordshire and the Thames Valley. To enter or nominate a company before the closing date of 15 September 2009, head to the above link.

We’re great believers in recognising success here at SmallBizPod, so if you know of other awards we should be highlighting, do get in touch.

[Picture credit: terren in Virginia licenced from Flickr]

As brutal as the cuts appear to be with over 60% of international staff being given the boot in addition to the cull of 33% in the US, revenues at MySpace are reportedly set to plummet by 15% to $495 million by the end of 2009.

It’s also clear, while the advertising market even online is challenging, Facebook continues to present a massive challenge having stolen MySpace’s social networking crown last year.

What’s the future for MySpace, that Rupert Murdoch so astutely purchased back in 2005?

Although growth is flat, it’s still profitable and ought to be more so now costs have been slashed so brutally.

It’ll be fascinating to see whether there’s a strategy to grow users after this phase is over. If not, it may be doomed to become the next Friendster.

Home Enterprise Day will take place on Friday 20th November as part of Global Entrepreneurship Week here in the UK and will be run by our friend Emma Jones at Enterprise Nation.

Its aim will be to encourage new businesses to start from home and to inspire existing ones to grow.

The day will include a conference for home entrepreneurs and the announcement of winners of the annual Home Business Awards.

If you can’t wait until November, then there’s always Home Enterprise Week which will take place on 6-10 July, recently announced by the National Federation of Enterprise Agencies (NFEA).

The NFEA typically represents enterprise support agencies around the country.  Through these support agencies it intends to focus on a series of local events to encourage and support home-based businesses.

Since Emma Jones from Enterprise Nation sits on the board of the NFEA, it’s no surprise that the federation has chosen to focus on the home enterprise sector.

Who knows, this interesting partnership may even lead to the creation of a new membership organisation designed to support and represent Birtain’s home-based small business community.

[Picture credit: scorchamac licenced from Flickr]

The survey of 420 business decision-makers reveals that just under two thirds do not measure or monitor water consumption in their business, while 85% have no water reduction targets in place.

Envirowise calculates the businesses could reduce their water bills by up to a third by taking a few simple steps.

Claire Sweeney, from the government-backed organisation designed to get British businesses using resources more efficiently, said:

With more than 9.8 billion cubic metres being used nationally each year, there is significant potential for businesses to save money and reduce their environmental impact by taking action on water efficiency.

Harvesting rainwater, controls on vehicle washing and monitoring of boiler operations are all ways in which water consumption can be made more sustainable.

The Rippleffect initiative gives businesses the chance to benchmark against others, identify cost savings and measure water consumption more effectively.

[Picture credit: beigeinside licenced from Flickr]

Thanks to low mortgage interest rate payments the Retail Price Index (RPI) stayed in the deflation zone at -1.1% for the 12 months to May, slightly higher than the -1.2% recorded in April.

The major elements creating this slight increase are a smaller decrease in interest rates compared to the rate cut in April 2008 and a small increase in the price of building insurance premia.

David Kern, chief economist at the British Chambers of Commerce, believes that the CPI will fall further towards the 1% predicted by the Bank of England and that RPI will continue to suffer deflation for some time.

He commented:

Whatever the longer-term inflation risks may be, they are unlikely to materialise in the near future and can only be dealt with after the recession ends.

The main priority must remain on easing the severe downturn in economic activity and to contain the relentless increases in unemployment. Economic policy must stay expansionary and it would be dangerous to withdraw the monetary and fiscal stimulus too early.

[Picture credit: austinevan licenced from Flickr]

Thanks to low interest rates and quantitative easing, the CBI believes that the last two quarters of 2009 will see modest improvements in UK GDP levelling out at -0.1% and 0% respectively.

Growth in the first two quarters of 2010 is expected to be slow at 0.1% and 0.3% respectively. Hardly a return to economic rude health, but a start perhaps.

As CBI director-general, Richard Lambert, said today:

Some commentators have been carried away by recent tentative indicators as evidence of ‘green shoots’. It will take some time before we can be sure these shoots have roots we can depend on for sustainable growth and, in the meantime, the government must do everything it can to help firms get access to credit.

Nevertheless, welcome news.

Many still have concerns, however, that as public spending contracts and national debt is addressed, we may be in for a second economic dip, after a period of weak recovery.

5% said they worked from home, 2% said they had to take the day off because of disruption and 1% chose to throw a sickie to avoid having to struggle into the office.

The survey commissioned by Citrix Online found that although 43% of workers said they could be just as productive online, 52% of employers banned staff from homeworking.

A superficially shocking figure, but surely a bit of Blitz spirit in the face of a tube strike is no bad thing.

There’s also the issue of having a strategy, the technology and management procedures in place to allow people to work from home effectively.

Hardly surprising then that business bosses should ban staff from ‘working from home’ as a reaction to the tube strike.

But there’s clearly a need for all businesses large and small to think about what flexible working really means and how it can be implemented to reduce the negative impact of snow, tube strike, or high absence rates.

Also many who claim they’d love to work from home on occasions like this, may actually prefer the buzz and social element of working in the office, if they were offered the choice of more homeworking on a more regular basis.

[Picture credit: Annie Mole, licenced from Flickr]

If you’d like to take part, head over to the survey of entrepreneurs and get yourself heard.

This forms part of a new initiative called Entrepreneur Country. Led by Julie Meyer, it aims to generate debate in the media and wider society about the importance of entrepreneur-led growth to the UK’s economic recovery.

And as she says:

With talk of the ‘green shoots of recovery’ becoming more prevalent, the timing is ideal to ask how these shoots will be best nurtured and whether enough is being done to support businesses through the recession.

We’ll be following the Entrepreneur Country initiative closely here at SmallBizPod.

We’ve been saying for a long time that not just entrepreneurs, but all small business owners will be the people we need to look to and encourage, if the UK is going to move safely out of economic turmoil, sooner, rather than later.

[Picture credit: Margaret Anne Clarke licenced from Flickr]

Ultimately though, as co-founder Errol Damelin set out in an interview about Wonga with SmallBizPod earlier this year, it’s the startup’s automated financial risk assessment back end that must be proving equally attractive as positive cash flow to investors.

The business has already provided cash advances to over 100,000 people with apparently very low default rates.

Errol Damelin said today:

We’ve built to scale and there is now huge scope for expansion and delivering even more value for our customers. Balderton Capital has backed us from concept and our two new investors show how game-changing the Wonga proposition is.

Being an innovative company in the financial services space was always going to be either impossibly difficult, or just what the industry needed after the great credit crunch calamities at the end of 2008.

It’s good to see Damelin and his team at Wonga have clearly impressed VCs and demonstrated that where there’s focus on a real business model and innovation, there’s still funding to be found.

The BBC quotes the Prime Minister as saying:

I can not think of a better person to be in place

And Sir Alan appears to be backing Mr Brown too. What exactly the former Amstrad boss and Spurs chairman will do is another matter, although more will be revealed as events unfold.

But already the appointment has been met by a certain amount of ridicule on Twitter and elsewhere.

There is definitely a sense that people don’t take Sir Alan that seriously. That he’s a caricature of an entrepreneur and businessman and that as a result his appointment is a bit of a joke. A sign of desperation, rather than astute thinking.

Here at SmallBizPod we think Sir Alan gets a bad rap. His style as the BBC is always keen to point out is ‘abrasive’, but at least he’s not playing the fool all the time like Richard Branson does so often to secure that extra ounce of PR.

Whether The Apprentice has done his reputation some harm or not, Sir Alan remains one of the UK’s most successful entrepreneurs and he did it without the silver spoon of someone like Branson.

His appointment may be an exercise in cynical populism, but we believe Sir Alan himself should be celebrated, not sneered at.

[Update: It's now transpired that Sir Alan has been made a Lord. As you'd expect he clearly drives a hard bargain. Politically though this seems like a suicidal mistake. Now is not the time for a Labour Party to be granting favours to millionaires.]

[Picture credit: demo1977 licenced from Flickr]

Over half of the 500 disabled people interviewed in the Business Link London survey had thought about starting their own business or had actually got one up and running.

The biggest problems they faced were sceptical investors (54%) and difficulties in overcoming the prejudiced attitudes of customers (56%).

As one interviewee is quoted as saying:

People think if you are physically disabled you are mentally disabled as well and treat you different to an able bodied person.

It’s not just the attitudes of others that’s a hindrance. The lack of disabled role models in business was also an issue for 36% surveyed.

But there are some extraordinary role models out there who have overcome disability.

One of the most inspiring is Liz Jackson from Great Guns Marketing who despite losing her sight has grown a successful tele-marketing business.

Take a look at her in action at a recent British Library event.

[Picture credit: Sarah M Scott licenced from Flickr]

OfficePOD also looks like an interesting option for freelancers and sole traders working from home. The problem is it’s only being marketed at employers.

Although not launched until early next year you can see OfficePOD at Grand Designs Live at the ExCel Centre in London until 4 May.

The company behind the concept is offering it to employers at £5,000 per employee per annum.

From a home worker’s perspective it certainly offers a secluded way of differentiating home from work life, freeing up the traditional kitchen table office and reducing distractions.

A recent YouGov poll found that just under 1 in 3 employees, or ‘ad hoc homeworkers’ have spent an average of 16 hours a month working from home.

According to OfficePOD the average cost of office space per year per employee in Central London is £9,000.

As commercial property prices plummet and layoffs in the City continue, it’ll be interesting to see quite how long this cost differential will stack up.

Although the corporate market is going to be attractive in terms of scale, it’s a little surprising that OfficePOD isn’t targetting its space at startups and sole traders.

Perhaps the one-off purchase of each POD is simply too pricey.

According to IMRG online retail sales increased by 9% month-on-month and by 19% year-on-year, slightly down on the previous comparison.

Official, albeit trial, statistics from the Office of National Statistics showed 14% growth in internet retail sales as a proportion of total retail sales in March to reach 3.4%, some way down on the Novemberr 2008 peak of 3.8% no doubt prompted by Christmas bargain-hunting.

Nevertheless, large e-commerce and online retail sites have also reported strong growth.

Asos, the online fashion retailer, saw sales climb an impressive 104% in the 12 months to end of March 2009.

Nick Robertson, chief executive of Asos, said:

We are not immune to the prevailing economic conditions, however, as widely reported, younger fashion is proving more resilient, internet shopping continues to gain in popularity and our international sales are being bolstered by the weak pound.

Meanwhile Amazon announced sales growth of 18% to $4.89 billion during the first quarter of the year.

Good news for online retail. More reasons why smaller businesses must have an online sales channel.

[Picture credit: jurvetson licenced from Flickr]

With such little money in the pot, there was scant support for the UK’s small and medium-sized enterprises.

The headline features for SMEs included:

an extension to 2010 of the period in which loss making businesses can claim tax on profits made in the last three years;

capital allowance rates doubled to 40%;

the launch of a £750 million investment fund to provide support to emerging technologies in green, digital and energy areas, and;

the introduction of a top-up supply chain insurance to help companies protect themselves against non-payment.

But there were also some stings in the tail for already hard pressed small businesses:

the 2p rise on fuel duty will have a significant impact on many businesses;

the increase in statutory redundancy pay from £350 to £380 may also be a double-edged sword;

no change to corporation tax rates with the rise from 20-21% remaining in place;

increasing the top-rate of tax to 50% may also be seen as a measure which is a disincentive for some of our most successful, high-flying entrepreneurs.

The Federation of Small Businesses (FSB) chairman, John Wright, said:

In what has been the most crucial budget in decades, the FSB is disappointed that small businesses have been largely ignored.

Meanwhile, the chief executive of the Forum of Private Business said:

The Chancellor has missed a vital opportunity to produce a Budget for business survival and economic growth. We called for a real and sustained support strategy, acting as a catalyst for broader economic recovery, but instead we got a Budget that appears to be focused on the next general election.

Mark Prisk, Conservative shadow minister for business and enterprise, commented in SmallBizPod’s Budget podcast:

I think this is deeply disappointing for small businesses, the Budget has really ignored their needs.

Meanwhile Lorely Burt, Lib Dem shadow on business and enterprise, who also gives a full reaction in our podcast later, said:

A bit like the curate’s egg it was good in parts, but there were a lot of things I was hoping to see that weren’t there.

She went on to say the Lib Dems wanted a bit more Robin Hood action – closing tax loop-holes for rich individuals and businesses in order to benefit ordinary businesses.

All in all, more worrying perhaps than the lack of benefits for small business in the Budget is the general economic outlook.

3.5% growth in 2011 seems enormously optimistic and as Rhodri Ferrier founder of men’s grooming start-up Bulldog said to me earlier:

I think the Chancellor’s growth forecasts for 2011 are a fantasy. We’re in an economy on a knife edge and it’s a very tough time to be a start-up.

For practical details on The Budget check out our very own accountant James Smith’s advice:

http://www.jamesesmith.co.uk/budget2009.htm

and also the Business Link website.

www.businesslink.gov.uk/budget

One of the recipients, for his work in promoting entrepreneurship, was Jamie Murray-Wells on a day when the company he founded, Glasses Direct, announced it had secured £10 million in additional investment for expansion into the US.

All in all a good day for the young entrepreneur, but also for all those who received Royal recognition for their own business success or achievements in encouraging others on their own entrepreneurial journey.

2009 has proved to be a record year for the Queen’s Awards. A total of 194 businesses and individuals receiving the honour, the highest number in the Awards’ 44 year history.

Of these 135 were given to companies in the international trade category, 49 for innovation and 10 for sustainable development.

The Queen’s Award for Enterprise Promotion was given to a further 11 individuals – the prestigious lifetime achievement award going to Professor Allan Gibb former director of the small business centre at the University of Durham.

A recent survey of previous winners reveals the business benefits of the awards:

77% of winners reported the win had brought added commercial value to their business;

73% of winners saw employee engagement rise;

73% of winners gained extra press coverage;

85% of winners said the impact of winning a Queen’s Award met or exceeded their expectations;

57% of International Trade winners experienced increased recognition overseas.

The finalists include:

Cath Kidston, founder of the eponymous fabrics, wallpaper and furniture design business;

Gail Rebuck, ceo of The Random House Group one of the largest UK publishing companies;

Harriet Green, ceo of Premier Farnell, a business she turned around and which now generates revenues of £800 million a year;

Kate Bleasdale, vice chairman of AIM listed Healthcare Locums, and recognised as one of the most successful entrepreneurs behind a growing company, and finally;

Ruby McGregor Smith, chief executive of strategic outsourcing company MITIE Group which she has helped grow to be a £1.4 billion turnover business.

The winner will be announced at an awards ceremony set to take place at the Saatchi Gallery on 28th April.

The Consumer Prices Index (CPI) also continued to drop during the final month of Q1.

The largest downward pressure on the CPI reported by the Office of National Statistics came from housing and household goods thanks largely to a fall in gas and other heating bills compared to a year ago.

There was also a smaller rise than a year ago in terms of petrol prices and a fall in the price of fuel helped reduce the cost of European flights.

As a result the CPI fell to 2.9% in March from 3.2% the previous month.

David Kern, chief economist at the British Chambers of Commerce said:

RPI is in negative territory and fell by more than expected. Deflationary pressures could make the recession worse in the short-term, despite quantitative easing and the huge budget deficit posing inflationary pressures over the medium-term.

RPI deflation will put negative pressure on wages which will aggravate recession, but government debt and likely future tax rises look set to create a whole other set of problems for the economy just as some may feel the recession is easing.

The Budget looks tougher and tougher for Mr Darling.

[Picture credit: James Cridland licenced from Flickr]

This marks the first institutional round of funding for SoundCloud which from launch has been backed by seed funding from a variety of angel investors including music producer Chris Zippel.

Since launching in October 2008, the service has rapidly grown to 100,000 registered users.

What’s more it has a sound business model.  It offers a range of three monthly subscription levels Pro Max at €59, Pro at €29 and Pro Lite at €9 which include the ability to store unlimited numbers of tracks, sets and contacts.

The service also comes with ‘drop boxes’ which can be embedded on Facebook and elsewhere on the web to allow easy uploading of tracks.

For DJs, producers and record labels the service clearly fulfils a need, making it much simpler to move music around using a dedicated service for professional musicians rather than geeky FTP or file uploading alternatives.

If you want to understand what it is that attracts investors in a down market, you could do worse than pay attention to Stefan Tirtey of Doughty Hanson who joins the SoundCloud board:

SoundCloud has all the qualities we look for in a business: a solid product solving a real problem, a proven business model, and a capable and ambitious founder team.

A free event for ambitious startups run by global PR agency Porter Novelli hopes to help you get the most from PR and discover opportunity amidst all the recessionary gloom.

Media Maxed will take place in London on Wednesday 15 April from 9.30 to mid-day.

Speakers will include Beermat entrepreneur Mike Southon, John Holiday, senior producer at Sky News, Jonathan Simnett, comms director at SpinVox and Mat Morrison, global head of digital at Porter Novelli.

There’ll be plenty of time for Q&As and there’s already a good crowd of startups and entrepreneurs attending, so the networking after should be worthwhile too.

If you’re interested in attending, don’t forget to claim your free ticket here.

[Picture credit: TheAlieness GiselaGiardino, licenced from Flickr]

The new proposals announced last night mean that businesses will only pay a 2% increase in business rates this year, spreading the remaining 3% from 2010 to 2012.

The move was broadly welcomed by business groups. Richard Lambert, CBI director general, said:

We welcome the announcement, but have been campaigning for a two-year freeze on business rates, instead of the 5 per cent rise that is still being applied over time.

The problem for many small businesses, however, is now an administrative one.  Rather than receiving the cash flow benefit of a deferred increase automatically, they will have to apply to their local authorities for that deferral.

Quite apart from the unnecessary administrative burden on businesses themselves, it also adds one more piece of red tape to be handled by local authority bureaucrats at a time when local and national government, like businesses, should be counting every penny.

[Picture credit: London Summit licenced from Flickr]

The Vodafone Mobile Clicks 2009 competition has a prize fund of €150,000 and builds on the successful event piloted in The Netherlands last year.

A geo-locational social networking service, NuLaz, that mashed up Facebook and Googlemaps to help people find their friends while on the move was one of the winners in 2008.

The competition will comprise three selection rounds running from April to September 2009, with a panel of mobile expert judges deciding a winner sometime in September.

To enter visit the Vodafone Mobile Clicks website.

This is the warning released today by Ros Wright, former director of the Serious Fraud Office and now chairman of the Fraud Advisory Panel (FAP).

According to the FAP reported fraud against businesses has risen significantly over the last 12 months.

Ros Wright said:

Recession brings enormous pressures and it’s tempting for small firms to treat fraud as the least of their worries. But coping with the consequences of even a small fraud can consume huge amounts of time and resources which are already at a premium. Fraud prevention is an essential part of any downturn survival strategy.

Advice offered by the FAP for all small business owners includes:

• Identify the areas of your business that might be most vulnerable to loss from theft or fraud, such as sales, stock, purchasing, expenses and record keeping and strengthen relevant procedures, including sign-offs for expenditure and expenses policies
• If possible, designate a senior member of staff with responsibility for managing these risks.
• Monitor your bank and credit card statements for unusual transactions and try to minimise cash transactions.
• Ensure that your business premises have adequate physical security protection including locks, keypads and alarms.
• Conduct checks on your suppliers, contractors and biggest customers and check invoices against original purchase orders and the goods supplied.
• Check references for all new staff; full-time, part-time, temporary, and casual.
• Adequately protect your IT systems and business information from the cybercrime risks posed by phishing, viruses, hacking and scams.
• Ensure sources of credit and finance are properly authorised by the Financial Services Authority; or licensed under the Consumer Credit Act 1974 by the Office of Fair Trading.

All good, practical advice, albeit a subject that most small business owners will want to put to the backs of their minds.

Nevertheless, as long as procedures are communicated clearly, most staff should be more than happy to see the financial security of the business they’re working for is being protected.

[Picture credit: wwarby licenced from Flickr]

Spring seems to be a good time to launch competitions for SMEs. Here are the latest we’ve heard about.

First off is the First Women Awards 2009 which celebrates ‘genuine glass ceiling breakers’ – so not strictly speaking a competition for female entrepreneurs, but certainly one worth entering, if you are.

It’s backed by the CBI, Lloyds TSB and the PM’s wife Sarah Brown.  Closing date for entries is 27 March, so get your skates on, although I’m sure they’ll accept submissions a few days after the deadline.

Next up is the Nectar Business Small Business Awards with three categories: Small Business of the Year, Startup of the Year and Entrepreneur of the Year. Winners will earn themselves £2,000 plus 50,000 nectar points.

Closing date for entries is 18th May 2009.

Finally, last but not least and with the biggest value prize fund of £25,000 of IT equipment is the Dell Small Business Excellence Awards supported by the British Chambers of Commerce.

The awards aim to recognise the best use of technology by a small business and while there will be a UK winner is also open to SMEs in various other countries around the world.

Closing date for entries in 3 April 2009.

[Picture credit: Adam Pniak licenced from Flickr]

Among the successful entrepreneurs are an ex-lawyer with a fresh line of Indian sauces, the founder of an online custom-made shoe shop and a 25 year old with global ambitions to change the world of graduate recruitment.

Priya Lakhani (27) of Masala Masala clinched first place in the ‘business’ category.  Priya only set up her authentic indian sauces company last year, having quit her job as a lawyer, and is already seeing her products stocked by major retailers in over 30 countries around the world.

Adam Duffy (26) walked away with the ‘creative’ category award for Looks Can Kill, his online business that allows customers to, well, customise a pair of trainers with their own designs.  A kind of Moo cards for shoes.

Global category winner was Lucian Tarnowski (25) of BraveNewTalent which is already making great strides to turn the world of graduate recruitment on its head, has offices in London and India and aims to have partners in 192 different countries.

Winner of the social and community category was Kerry Kolbe (30) whose business Signal Films provides free opportunities for young people in Cumbria to get involved in film and digital technologies.

And ‘Teen’ winner was Matt Lovett (17) who runs a very successful internet marketing group called WOW Media, based in Birmingham with 5 employees.

Finally, winner of the ‘people’s choice’ awards was Dean Rhodes-Brandon (17) whose Your Local Cinema is a not-for-profit website that helps hearing or visually impaired people get the most from the cinema.

More details on all the finalists and winners can be found at Make Your Mark’s Enterprising Young Brits website.

Although most small business owners recognise the productivity and motivational benefits of a generous holiday entitlement, the timing of the increase in the middle of the recession may seem unfortunate.

For each employee on a minimum wage the 4 day increase in time off will cost in the region of £172 per person per annum, plus the loss of four days work.

Nevertheless, with many staff likely to be working harder, with little prospect of a pay rise, the increase in permitted days holiday could also be seen as a timely positive for employee relations.

Holiday entitlement for part-time workers will need to be calculated on a pro-rata basis.

In another change, payment in lieu of statutory holiday will no longer be permitted although any time off allocated above the legal minimum can still be claimed.

Full details and other practical information can be found at the Business Link website.

[Picture credit: jensen_chua licenced from Flickr]

This surprise increase was counterbalanced by the much anticipated fall of the Retail Price Index (RPI), which includes mortagage interest payments and council tax, to 0.0%.

Food and non-alcoholic drinks were the biggest upward pressure on the CPI during February. The only downward pressure on consumer prices came from energy bills which remained static last month compared to an increase the year before.

Downward pressure on the RPI was primarily exerted by falls in the cost of housing thanks to the plunging property market and falling interest rates.

The 0.0% RPI means the spectre of deflation is now very real. And the strange divergence of the RPI and CPI could see wages frozen or cut at a time when many prices are not falling as rapidly as some predicted. Not a good combination in terms of stimulating consumer spending.

For small businesses, however, falling prices are a mixed blessing. Some will benefit from the reduced costs of fuel or transport, but others holding a large amount of stock may well be looking on to see its value falling by the day.

A recent survey by More Th>n showed that UK SME’s costs fell by 2.9% during the last quarter of 2008.

Although not all deflation is wealth destroying, many small businesses will be wanting to cut costs, improve productivity, review contracts and make sure supplies are ordered in smaller, just-in-time batches.

[Picture credit: FireChickenTA99 licenced from Flickr]

Two of the key changes proposed by Ofgem are putting an end to automatic roll-over when fixed-term utility contracts expire and ensuring that SMEs receive clear and transparent contract terms and conditions.

A recent survey by business price-comparison and switching service Make It Cheaper found that 84% of small businesses were unhappy with their current utility suppliers, but only 14% knew when their existing contract came to an end.

Make It Cheaper managing director, Jonathan Elliott described the end of automatic roll-over as:

… good news for over a million businesses stuck on these type of contracts. Businesses rolled-over are typically charged twice the cheapest rates available (current renewals are at around 15p per unit for electricity compared to the best rates of 8p) but we have seen them at three times higher (worst case recorded = 32p).

The proposals will be set out in April in a consultation document designed to amend the licence conditions under which utility companies operate.

It is anticipated that following consultation, final decisions will be made in July, with implementation in the autumn of 2009.

Alistair Buchanan, Ofgem chief executive said:

All consumers will be given greater power in the market and small businesses in particular will have a stronger hand to play.

[Picture credit: delgaudm licenced from Flickr]

But it’s not just geeks and celebrities who are now into Twitter. Small businesses are adopting the platform in increasing numbers according to research released today by mobile phone network O2.

Nearly one in five (17%) SMEs surveyed said they were tweeting regularly, with more than a quarter (28%) of those signing up over the last 4 weeks.

According to the research marketing and recruitment cost savings are cited as the main benefits of the much hyped micro-blogging service.  One in ten firms claim to have saved £5,000 by using Twitter and nearly a third £1,000.

In addition to the 74% who highlight cost savings and marketing advantages, small businesses found the service useful for keeping in touch with customers and suppliers (42%), monitoring competitors (34%) and generally feeling the benefit of being connected to other small companies (28%).

The simplicity of Twitter may also be seen as a plus.  Four in ten say they are using it more than either LinkedIn or Facebook.

The research, conducted by Vanson Bourne for O2, surveyed around 500 SMEs and estimates 700,000 UK small businesses are now using Twitter (i.e. 1 in 6 of the total UK SME population).  This is probably a bit of a stretch bearing in mind the total number of twitter users globally is guestimated to be around 6 million as of February 2009.

Nevertheless, the basic findings of the survey feel right anecdotally.  SmallBizPod has been tweeting (@alexbellinger and @smallbiztweets) since 2007 and we’ve written about the business and business benefits of twitter on several occasions.  It’s certainly our experience that there’s been a surge of small business interest in Twitter over the last 12 months.

Even the Federation of Small Businesses has recently started to tweet, so perhaps we really have reached some kind of SME micro-blogging tipping point!

The research carried out by Continental on behalf of Bibby Financial Services, showed that 79% of small business owners are taking positive, practical steps to get through the recession.

Most (84%) are working closely with both customers and suppliers to ease in part the negative impact on cash flow created by the credit crunch.

Over a third (39%) are being much more open in terms of their business plans with customers and suppliers and 56% have negotiated better payment terms.

For some businesses, however, the measures required to survive the recession are more stark.

Cuts in marketing and advertising are the order of the day for 37% of small businesses, while 33% of business owners said they were using their own personal savings to support the cash flow needs of the business.

Perhaps unsurprisingly, business owners who had experienced previous recessions (just 46%) were much more focused on rigorously controlling finances than those who’d not previously had to survive a downturn while running their own business.

With a combination of caution, fiscal acuity and strong relationships with suppliers and customers alike, women business owners appear to be best placed to come out of the current economic cycle strongly.

As a result the research suggests the new breed of super-entrepreneur is likely to be:

• Female
• Aged between 45 and 54
• Living in the South East
• Have started their business between 1995 and 1999
• Running a business with a turnover of between £250,000 and £500,000
• Running a business that employs five or more people
• Experienced in two previous downturns including this one

[Picture credit: cadesa licenced from Flickr]