smallbusiness.co.uk: Helping your business think big

Banks have forever been associated with crime, but now it’s the people running these financial institutions – or some of them – who have become synonymous in the public's mind with a reckless greed that borders on the criminal.

Finance researcher TNS conducted a small business banking survey and discovered a number of frustrations among the 9,000 SMEs and 4,500 start-ups that responded.

When it came to a bank understanding the needs and requirements of a business, there was a drop in satisfaction from 81 per cent in the first quarter of 2008 to 69 per cent in the final quarter. Similarly, in relation to timely lending decisions, there was a drop from 66 per cent to 55 per cent over the same period.

It should be noted that experiences this year may be vastly different as the recession gathered momentum, but the figures appear to demonstrate that a large number of growing businesses were content with their banks and the decisions made.

That may not sound right, but it seems to be borne out by a mere two per cent drop in the fourth quarter (down to 82 per cent) in terms of a respondent’s satisfaction with a bank’s main contact, and a fall of just 12 per cent in the same period (down to 71 per cent) with regard to satisfaction with support staff.

Reasonably happy SMEs? Moderately content owner-managers? This may not be the stuff of the all-singing and dancing banking adverts from a few years back, but it’s hardly a damning indictment of banks either.

James Dunleavy, a consultant at TNS, says: ‘Particularly with regard to the Enterprise Finance Guarantee, many small businesses just don’t feel it is filtering through to them. And this sentiment has been fuelled by the government’s bail-out of large companies.

‘In terms of increasing customer dissatisfaction, my opinion is that banks just haven’t been quick enough to act. Many businesses now require greater levels of support; they don’t just want a telephone conversation.’

A much bigger problem is that as people come to terms with living within their means, they are spending less. A fall in consumer demand and the subsequent shrinking markets are the real danger to the commercial health of many SMEs.

The Association of Chartered Certified Accountants (ACCA), in conjunction with the Open University and Barclays Bank, surveyed 1,000 companies and found that only 25 per cent were held back by a lack of finance.

Robin Jarvis, head of the small business unit at ACCA, comments: ‘Compared with the 1991 recession, businesses are now much more concerned about falling demand [than] the availability of finance, so the government should focus its efforts on stimulating consumer demand.’

Regionally, the stats show that Wales and the North East were worst affected, while Scotland’s SMEs are apparently performing best of all with more than a third (34 per cent) saying they had not been adversely hit by the recession.

With the likes of hedge fund supremo George Soros saying the worst of the recession is over but then the Bank of England declaring that recovery won’t begin until the middle of 2010, it’s evident there remains a long way to go before business as usual is resumed.

There are currently no comments on this article