The Federation of Small Businesses (FSB) says that there has been a 50% rise
in the number of small-company failures – from 40 to 60 a day over the past
two months.
But it also points out that this should be seen in context. Even allowing for
this rise, the rate of closures falls far short of the 1,000 per week that
failed during the recession of the early 1990s, and there are likely to be a
number of sectors that fare well in the coming months.
Bright spots are likely to include food-delivery firms, discount and online
retailers and garages, which should all do reasonably well, despite the
recession. “There will be some winners,” said Stephen Alambritis, spokesman
for the FSB.
Whether it is by helping those worst hit by the downturn or capitalising on
the shifting buying patterns of consumers, some companies are experiencing
surprisingly big upturns.
Companies offering goods and services at the cheaper end of the market are
thriving. At the larger end of the spectrum this means the likes of
McDonald’s, the fast-food chain that had 7% more customers last month than
in October last year, served the equivalent of about 6m extra people.
Butlins, the holiday company, said that advance bookings for next year are
9% up on the equivalent period in 2007. Cinemas are also faring well, as
people look for escapism and cheaper entertainment. Similarly, online
entertainment retailers, such as Play.com, are doing well.
TM Lewin, the shirt retailer, is enjoying a strong autumn with sales and
earnings on course to be 20% better this year. “People are smartening up,”
said Geoff Quinn, its chief executive. It is not only businesses that are
perceived to be offering value that are trading well. One of the more
unusual trends to emerge is how people still like to treat themselves to
little luxuries.
Kevin Gould, spokesman for the Chocolate Society, which runs an online
retailer, said sales were ahead by about 15%. “People buy more luxury
chocolate in a recession as an affordable treat.”
Tbe bicycle repairer
Ben Thomson started his bicycle repair business, Cycleworx, last October but
it has moved up several gears in the past few months.The credit crunch was
in its infancy when the New Zealander started the company with a £200 loan
from his girlfriend. Business was strong from day one and after six months
he moved to larger premises at a business park in Wandsworth, London. He
also diversified away from repairs to building bespoke bicycles and selling
accessories. “Business has been improving all the time but in midsummer it
really started to take off and hasn’t slowed down,” he said.
The cobbler
In the shoe repair shop that Nicholas Nichola runs in north London, he has to
cast his mind back to the dark days of the early 1990s for a time when
business was as good as it is today at Premier Shoes. People are deciding to
patch up their loafers and pumps rather than splashing out on a new pair.
The state of some shoes brought to him is dire. “We are seeing people come
in for jobs that they wouldn’t have bothered with before,” he said. As a
result, he has seen a 25% to 30% increase in his business this year over
last. “The last time it was like this was 1991, but it wasn’t as big as
this,” he said.
The venue host
Companies and public sector bodies still need to train staff in a downturn but
now they are shunning expensive, overnight trips to country-house hotels in
favour of much more modest, city-centre venues.That is the view of Alistair
Stewart, managing director of Etc Venues, which has seen a 36% uplift in
sales since the start of July compared with the same period last year.
Stewart said that his group, which has sites in Birmingham and London, had
seen a shift in the type of venues that clients demand. “Deliberately,
there’s nothing glamorous or ostentatious about our venues,” he said.
The innovator
Many companies were growing anxious about soaring energy prices long before
the downturn started to bite, but the latest pressure has certainly forced
them to try to do something about it. This, said Nigel Orchard, founder of
Pilot Systems, has been a boon to his company, which supplies equipment to
help companies monitor their power usage far more closely, saving them
significant sums on energy bills. Pilot Systems has seen turnover rise
threefold as a result and the company is hopeful that interest in its
products will continue to increase as the recession begins to bite.
The IT expert
The directors of Genesis, a Manchester-based IT firm, have turned the business
round since buying it from retailer DSG last year. Its hosting business
allows clients to do away with costly server infrastructure. It also sells
customer relationship management software, sales of which have soared as
struggling companies strive to hang on to clients. Two months ago Genesis
increased its earnings forecast to £3.5m on sales of £33.5m. Mark Seemann,
one of the directors, said a sharp increase in business in the last three
months could see the forecast revised upwards again in the new year.
The pizza man
Takeaway food seems to be one of the few sectors that thrives no matter what
the economy is doing. Curries are a national staple, but pizzas are eating
into the market in a big way. Adnan Medjedovic, boss of Firezza, an
eight-strong chain selling gourmet pizzas around London, said that his sales
are up about five per cent year on year, and he is pushing ahead with plans
to expand. A ninth pizza parlour is expected to open soon. The credit crunch
suits takeaway operators like Firezza, said Medjedovic. “People realise that
pizza at home is still cheaper than going out to a restaurant.”
The engineers
Since Kevin Jones and Ian Quest founded their engineering firm Newton
Consulting in 2001, it has proved a hit with clients, including Rolls-Royce,
BA, Nissan, Xerox, Cadbury and the NHS. “The pipeline is the strongest it’s
ever been,” said Jones.They help manufacturers to increase productivity by
improving processes. Newton expects to turn over £6m this year – a 50%
annual increase – and is to double its workforce to 60. “In good times the
companies called us because they wanted to increase productivity,” said
Quest, “but now they want to make their processes more cost-efficient.”
The pawnbroker
Only 18 months ago, Graeme Mulheron became a franchisee of Cash Generator,
which buys and sells secondhand goods, in addition to providing cheque
cashing and pawnbroking services. “It has proved particularly fruitful
during this year’s credit crunch, with customers looking both for discounts
on the high street and instant cash,” he said. Mulheron has stores in Luton
and Stevenage, north of London, and a third is to follow soon. “In the last
six weeks alone at the Luton store, we have witnessed a fantastic increase
in retail sales of 28%,” Mulheron added with satisfaction.
