Executive summary

Despite the current economic downturn, around half of all respondents in this year’s Baker Tilly 2009 Finance Directors' perception survey feel the recession will benefit their businesses in the long term. Those that have reacted quickly to market conditions will be leaner and fitter and better placed to take advantage of new markets and products and less efficient rivals.

The recession has also presented entrepreneurs with a once-in-a-lifetime opportunity to take advantage of significant benefits in merger and acquisition activity.

The survey, which has become synonymous with benchmarking the opinions of senior financial directors of SME companies, reveals that despite this optimism, only those companies with a strong, long-term business plan will emerge from the recession unscathed, mirroring Darwin’s “Survival of the Fittest” theory.

Concerns identified by the survey include the lack of available bank credit and a reduction in the availability of credit insurance. The number of companies worrying about this has rapidly risen since last year’s Baker Tilly survey. The restricted availability of bank finance was of concern to only 23 per cent of businesses six months ago – this has now risen to 35 per cent. In addition 60 per cent of respondents said that late payment of invoices was impacting their company’s liquidity.

Those companies that have made staff and investment cuts have taken significant action with 13 per cent of companies cutting at least a fifth of the work force and 21 per cent reducing capital investment by at least 20 per cent.

On the plus side over a quarter of businesses were looking to acquire another business in the next 12 months.

“There are some positive messages emerging from the survey data. Leaner, fitter business models will be able to grasp the post-recession landscape when their less-efficient competition has fallen by the wayside. However, times are still tough and many businesses are struggling – companies must not rest on their laurels.”
Laurence Longe, National Managing Partner, Baker Tilly

“It is certainly too early to talk about the green shoots of recovery. True there is some good news but there is even more bad news. I am encouraged by the number of businesses reporting a more positive outlook on sales, jobs and future growth and by those who see a positive impact through increased efficiency and competitiveness. But it is a cautious optimism, there remain significant obstacles to be overcome before there can be widespread economic recovery.”
Mark Harwood, Head of Corporate Governance and Risk, Baker Tilly

Contents

Follow the links below to discover how your peers plan to cope with the ongoing recession and their thoughts on how to respond to economic recovery.

Introduction - This report analyses finance directors' responses to the survey and summarises their economic views and possible strategies.

Growth - Comparing like-for-like sales in the first six months of 2009 with the same period last year provides a basis for some optimism.

Fiscal measures - An analysis of finance directors' views on the effectiveness of the government’s stimulus packages over the past six months.

Cash flow - UK businesses reveal just how badly the lack of liquidity and available credit has hit them.

Managing costs - Finance directors reveal how they responded to the pressures on their businesses through managing employees and rethinking workforces.

Investment - We explore how businesses intend to fund their own expansion and to what extent plans for investment have been hampered by the economic downturn.

Post-recession - Finance directors give their views on how the UK will look in the aftermath of the global financial crisis.