Small firms report weak trading conditions

As the UK economy continues to slowly recover, trading remains mixed for the 10 small firms that the BBC News website has followed over the past two years.

While most say business is growing, the general opinion is that it remains fragile - and some are fearful about the government's planned spending cuts, and the rise in VAT from the start of 2011.

However, for one of the companies - Harry Murray's HMS Staircases - trade is now growing strongly, six months after he had to put his former business into liquidation.

DAVID GROOCOCK, ST MAUR HOTEL OWNER

David Groocock runs the St Maur Hotel on the Isle of Wight (IOW), which has an annual turnover of £200,000 and employs six people.

DAVID'S REVIEW Confidence in the business - 8 out of 10 Key current concern - bank support for small businesses

He is a member of the local chamber of commerce and the chairman of the IOW tourist board.

"So far so good for 2010, with bookings up on last year.

While it has been a struggle to get full occupancy in August, I'm looking forward to the autumn. We are completely full in September already, and October looks strong. So I'm optimistic that we will be busy.

On the broader front, only time will tell if the new coalition's measures will take effect, but I wish them luck as they certainly appear to acknowledge the seriousness of the UK economy."

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CARL BRADLEY, OWNER, FUSION SYSTEMS

Carl Bradley runs a computer shop with his wife in Eastbourne, East Sussex.

CARL'S REVIEW Confidence in the business - 7.5 out of 10 Key current concern - too much doom and gloom stopping customers from spending

He employs three people and the business has an annual turnover of £540,000.

"We are signing a new lease with a lower rent to help get through the next few years. This means we can lower our prices or keep them on hold when the VAT goes up in January.

Elsewhere, we spent way too much on advertising without any return, which we really could not afford to do.

Trade is still very up and down, and as every sale counts we are doing all we can to help the customer.

Banks still not lending, but we have given up trying.

There are times when I think is it all worth it? But then I think I've lasted this long and things will get better, I hope."

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MARK STIMSON, BPL SOLICITORS DIRECTOR

Mark Stimson is a director at BPL Solicitors in Dorchester, Dorset, which specialises in property law.

The firm has an annual turnover of £2.5m and there are just under 40 employees.

MARK'S REVIEW Confidence in the business - 8 out of 10 Key current concern - availability of mortgage products

"I'm pleased to say that we have managed to trade in profit [just] for the first half of the year.

We have just gained a source of work that has considerably increased our new case numbers - they have almost doubled.

As a result, we have recruited seven new staff, in come cases re-recruited, and our direct-to-market internet service is also proving to be highly successful.

We have become a much leaner outfit as a result of the trials and tribulations of the past two to three years.

Whilst we are not yet out of the woods in terms of activity levels in the property market and banks' willingness to lend on an affordable basis, as long as the market doesn't dip any further, we can see a route to increased profitability in the medium term."

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JAMES STEWART, JAMES STEWART AND SONS CLOCKS

James makes and sells high-end grandfather and grandmother clocks in Armagh, Northern Ireland.

He employs five people and the clock-making company has an annual turnover of £180,000.

JAMES' REVIEW Confidence in the business - 8.5 out of 10 Key current concern - that the VAT rise will stunt economic growth

The clocks retail from £1,660 to £10,000.

"Our business year so far has been very much an up and down affair. We, as probably most of the nation, were on tenterhooks leading up to the general election.

That being said, our order book has remained at a fairly comfortable level when the political and economic climates are taken into consideration.

Certainly we would like to have a full order book, but from talking with business colleagues there are not many who can boast that at present.

The summer months are generally a quiet time for us, but we have been fairly busy over this period.

Could it be that more people are not taking foreign holidays as usual and are spending their money at home? Who knows?

The massive spending review by the coalition as yet doesn't seem to have had any negative effect on our business.

In fact, we are enjoying the benefits of the current weak euro as a lot of our materials are sourced from mainland Europe.

As we approach September we are gearing ourselves for our busy season with the lead up to Christmas.

It's a hard one to call this year. Will the government spending cuts have taken their toll by then, and will the hike in VAT in the new year hit us hard?

On a brighter note, most of the banks are back in profit, we appear to have a more stable government that seems to be grabbing the bull by the horns, and we are in a position of growth which couldn't be said for the same time last year.

I wouldn't say we are out of the woods yet, but I feel we are in a stronger and more positive position heading towards the end of 2010 than we were a year ago."

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LOUISA SHEPPY, OWNER, SHEPPY'S CIDER

Louisa Sheppy runs Sheppy's Cider, a family-owned Somerset cider-maker, with her husband David.

It now supplies most supermarkets in the South West, and some nationally, but remains a small producer in the wider cider industry.

LOUISA'S REVIEW Confidence in the business - 7 out of 10 Key current concern - people's continuing spending power

"The last six months seem to have been dominated by politics and its influence on our industry.

An increase then decrease in cider duty created a sense of uncertain direction, quite apart from an enormous amount of work changing prices in March and June. The way is now clear for the government to re-visit this, and they undoubtedly will.

Design of our new product Somerset Draught has occupied much time, and will culminate in its first bottling in early August.

This will also be a kegged cider and, as kegging is completely new to us, there has been a great deal to learn. We have made substantial investments in new filtering and labelling machinery and tanks, and the year got off to a good start with sales."

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STEVE VALENTINE, GWYNEDD CONFECTIONERS

Steve Valentine runs a confectionery factory that produces a range of chocolate and fudge products, as well as rock and sweets sourced from the local area.

STEVE'S REVIEW Confidence in the business - 6 out of 10 Key current concern - that some independent retailers won't be able to survive the next 12 months

It is based in Gwynedd in Wales.

The factory has 27 employees.

"Sales to date are approximately level with those of 2009, which is not bad considering 2009 was a record-breaking year.

Having said that, we must remember 'customers are king', and it would appear that the majority are placing orders with caution, especially with advanced orders for Christmas."

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HARRY MURRAY, HMS STAIRCASES

Harry Murray runs a manufacturing company that makes wooden staircases and other architectural features in Newcastle-under-Lyme, Staffordshire.

Now employing 22 people, HMS Staircases has an annual turnover of £1.7m.

HARRY'S REVIEW Confidence in the business - 9 out of 10 Key current concern - more support needed from banks and the government to support small firms

"It has been a very turbulent and topsy turvy year for us so far. As well as being very scary.

I had to put my former company HMS Joinery into liquidation in February. I don't need to rake all that up, but a small reminder - the bank pulled the plug on me - despite my pleas of new contracts coming through.

I personally lost half a million pounds, yes £500,000.

Well, the predicted contracts did come through, despite the bank doing its best to scuttle me.

I have started afresh and stronger than ever, with even more determination to succeed.

We are now turning over double the amount that we were six months ago, and business couldn't be better.

If I sound bitter towards the bank in question, that is because I am. But I mustn't dwell on the past, just look forward.

If we continue in the same vein as we did in 2007, we'll not only equal it, we'll double it, so there is life after the recession."

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LEO WHITE, HYDRANT DESIGN

Leo White runs a design company in Cumbria. He employs five people and has an annual turnover of £250,000.

He deals a lot with small start-up companies and has about 120 clients on his books.

LEO'S REVIEW Confidence in the business - 9 out of 10 Key current concern - that the recovery doesn't slow too much, or we return to recession

"We've had a really busy first half of the year, and continue to see cautious growth and extension to the length of commitment that our clients are making.

Whilst the economic climate continues to be a justification for clients negotiating hard, we've found that our specialism in open source technology and it's growing profile as a cost-saving measure has helped us maintain healthy margins.

Our net profit is well up on last year as a result of efficiencies we've made through investing in new admin systems.

All in all we've changed a lot as a company, but have ultimately benefitted as a result.

It's not been easy at times and it's credit to a team who can adapt fast that we are still feeling positive."

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MIKE GRANT, ISLAND LEISURE

Mike Grant runs a residential and commercial timber lodge manufacturer in Perth, central Scotland.

There are 21 people employed in the company, which has an annual turnover of £2m and produces about 30 lodges a year.

MIKE'S REVIEW Confidence in the business - 7 out of 10 Key current concern - to maintain our current level of production

"As another summer draws to a close, we can reflect on the projects completed over this period.

And more importantly, the level of enquiries and enquiry type we have been and are currently processing.

Sales are not strong, but very much alive due to our product quality and the strength of our after-sales service, which we have become renowned for, over the past 25 years.

Leisure development by investors is still ongoing, albeit on a low key basis, and previous home developers are currently involved with us as an alternative to mainstream housing.

The gist of what we are trying to say, is if weren't providing show lodges to certain sites, these sites wouldn't have any product to show/sell to potential customers.

Once on site these buildings are selling, yet banks, finance companies etc, are not making finance directly available to allow some site owners to do it on their own.

The future is very much as it was this time last year - a long-term unknown. However, with effort and commitment to our customers over the coming period, on top of our reputation built on brand and service, we feel well-placed to service whatever opportunities are available to us."

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JENNY LEES, OWNER, DENTANURSE

Jenny Lees produces dental products for dentists and the public from her base in Preston-on-Wye, Herefordshire.

She employs five people at the company, which has an annual turnover of between £300,000 and £400,000.

JENNY'S REVIEW Confidence in the business - 9 out of 10 Key current concern - being stepped on by large companies at every turn

"Dentanurse sales are up this year, so we appear to be bucking the trend.

However, we have had problems with our suppliers.

With so many suppliers going under, their client lists have been purchased by the survivors. But often this means the purchaser does not have the capacity to take on all of the extra work.

A company we had worked with for 10 years purchased a sinking firm and it's lead time to supply a product we regularly need grew from eight weeks to six months, leaving us dangerously short of stock.

The excuse given was that a large German company had been added to their client list by the purchase, and that company was tying up the production line for six months. Hence us small guys had to wait.

At the other end, suppliers are squeezing for earlier payment due to so many firms going under and leaving bad debts.

Even companies we have worked with for years are being driven by accountants to tighten everything up.

At Dentanurse we are stuck in the middle because I cannot chase my customers for earlier payment as most have been customers for 20 years or more.

Others are the supermarkets and pharmacy chain stores, and their conditions of payment are set in stone.

In one case the terms of payment were changed from 30 days to more than 90 without any consultation or agreement with Dentanurse. And they awarded themselves an extra 2% discount when they finally paid the account."

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