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SMEs diversifying in tough trading conditions
SMEs are turning to new business tactics and slashing prices in a bid to capitalise on this summer's events, research from Aviva has found.
With small business owners keen to increase turnover, many are diversifying into new areas and introducing sale strategies through reduces prices, sales and discounts.
The most popular opportunity was cutting prices, with around 28 per cent of firms saying they had cut the price of stock this summer compared with 23 per cent during the winter.
The biggest change in tactic over the last six months came from firms diversifying into new products and services, with 26 per cent doing so this summer compared to 17 in the previous six months. A further 20 per cent of firms also increased their sales and discounts this summer.
According to the research, the Queen's Diamond Jubilee delivered a boost in revenues for 27 per cent of SMEs. One in four remain optimistic that the Olympics will bring a similar boost to trade, with a fifth of firms altering their business operations to maximise opportunities.
Business conditions, however, remain tough for SMEs. Only 6 per cent of firms are finding trading conditions 'easier than expected', down from 22 per cent six months ago. Meanwhile, over a fifth of firms believe that the positive knock-on effects of the Olympics will be short lived, with fears it could lead to a dip in revenues during the third and fourth quarters of the year.
Recent figures from the Office for National Statistics (ONS) indicate that the UK recession had deepened and are thought to have added to concern. With an increasing number of small firms cutting permanent or temporary staff, many said they were also reducing staff pay, hours and benefits to cut costs.
David Bruce, commercial product manager at Aviva, said SMEs owners were 'hanging on in there.'
"Trading conditions clearly remain tough, while it seems many owners are perhaps being more pragmatic than optimistic in their forecasting of future revenues."
"Diversification in particular is an excellent way to protect and grow the bottom line, while efforts to capitalise on the Jubilee and summer sporting boost are other examples of this. For some SMEs, the investment has paid off, with revenues increasing markedly already this summer."
Bruce advised SMEs to revise their business plans in preparation of 'expected bumps'.
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