Small and medium businesses throughout UK could generate £400 billion in revenue this winter. An analysis of a report entitled “The Importance of Winter for SMEs” undertaken by Centre for Economics and Business Research (CEBR), on behalf of energy giant British Gas, predicts this winter to see the strongest revenue growth for UK small and medium-sized enterprises (SMEs) since the beginning of the global recession.
According to the report small and medium businesses throughout UK will see a 7% increase in revenues on the same period last year and a 12% increase on winter 2010/11.
However, business growth depends upon the sector you are in. Wholesalers particularly could expect to see £130 billion in revenues over the next 3 months while the retail and manufacturing sector could witness sales of £24 billion and £42 billion respectively. At 27.7% educational businesses will see the largest proportion in turnover this winter as a long school and university summer break will push work into other parts of the calendar year. In comparison, it will be a little quieter for businesses in the construction sector with 22% of their annual turnover falling between December and February.
However, not all will be smooth sailing for SMEs as the next few months pose significant challenges too. Generally, retailers and other businesses see a heightened increase in demand leading up to Christmas with a dip in revenues in January and February. This may result in more SME liquidations and bankruptcies in the first quarter compared with any other time of year. The report predicts more than 3,000 businesses will fail in the first quarter (Q1) of 2014, which is a 14% decrease on the same period last year.
Colin Edwards, senior CEBR economist said, “Our research has shown that winter isn’t just an important period for retailers, but is also make or break for education businesses which see well over 27% of turnover fall in the period. The unique peaks and troughs resulting from Christmas create both opportunities and risks for all small businesses, with many more liquidations and bankruptcies falling in Q1 compared with any other time of year”.
Since most cases of flu are reported between December and January the research also highlights a major human resource risk particularly for SMEs (75%) in which the owner is the only employee. It said that a business could lose as much as £200 for every day that an employee is absent from work.
The research also said that with about £1 billion in online sales a week in December, those retailers without an effective website could miss out on their share of the pie. Nevertheless, the overall picture is bright for small and medium businesses in 2014. Angela Needle of British Gas, confirms, “This research reveals a positive outlook for small businesses this winter. As growth returns, the businesses we work with up and down the country are looking to capitalise on this opportunity.”