The Importance of winter for SMEs

This winter will see the strongest SME growth since the financial crisis began, according to a new report from the Centre for Economics and Business Research (Cebr) and British Gas Business.

The report, The Importance of Winter for SMEs, predicts £400bn of revenue for the UK’s small businesses during winter 2013/14, representing a 7% increase on the same period last year, and 12% up since winter 2010/11. Wholesalers have the largest opportunity, with an estimated £130 billion of potential revenue available, whilst retail and manufacturing businesses are looking to share a slice of £24bn and £42bn respectively.

The report makes useful reading for those who advise SMEs, particularly accountants:

• The winter growth opportunity varies by SME sector. Educational businesses have the largest proportion (27.2 %) of turnover in winter, as the long summer hiatus pushes work into other parts of the year. Winter is quietest for construction firms, who only see around 22% of their annual turnover fall between December and February.
• Yet the winter months also present a number of significant challenges for SMEs. The lead up to Christmas brings bumper sales for many retailers and other businesses, but this is typically followed by depressed revenues in January and February that result in more SME liquidations and bankruptcies in the first quarter compared with any other time of year. The report forecasts that more than 3,000 small businesses will fail in the first quarter of 2014, which would represent a 14% decrease on the same period this year.
• Severe weather can compound the pressures on small businesses. Cebr have forecast that a repeat of the kind of supply chain disruption caused by snow and colder weather in 2010 would cost the economy more than £1.9bn this winter, wiping 0.5% off UK economic growth.
• As cases of flu peak during December and January, illness also poses a major human resources risk, particularly to the 75% of SMEs in which the owner is the only employee. In businesses where the owner is the only employee, the business could stand to lose as much as £200 for every day they are absent from work.

I’ve already gone on record to say that the SME market is one of great potential and growth for accountants who are arguably in the best position to assist SMEs. Download the full reportfrom Cebr and British Gas. Registration is required.

Read the Cebr press release here.