smallbusiness.co.uk: Helping your business think big

The austerity of the forthcoming Spending Review is fast taking on the spectre of a latter-day Spanish Inquisition.

Government advisers are fastidiously combing the nation’s ledgers to identify the faintest hint of indulgence and fiscal excess in the public domain.

As we keep being reminded, Britain had the largest deficit in peacetime history last year and the highest in the G7 and G20. Proposed cuts range from renegotiating IT contracts to – apparently – selling off national heritage sites and slashing science funding which could impact high-tech companies.

One financial commentator, Jonathan Davies, who SmallBusiness.co.uk first spoke to when the credit crunch initially bared its teeth in late 2007, continues to insist that we are in the midst of a 1930s-style depression.

If consumer and commercial debt are predicted to rise, along with unemployment, it poses quite a dilemma for someone running a business. Do you go back into “recession mode” or carry on with the mindset that people are going to continue to spend?

In short, do you stick or twist?

A survey of 200 senior managers by Berkshire Consultancy shows that over four-fifths of respondents regard the current uncertainty as tougher to operate in than the recession. Nearly half (49 per cent) of those bosses say they are being forced to regularly shift the strategic focus of their business as a result of the uncertain climate.

One of the consequences of this is the impact it has on employees. Around half of managers said they're concerned that their organisation’s response to the market conditions is confusing the workforce and damaging the perceived sincerity of their leadership team. As a result, nearly two thirds are concerned about a negative impact on morale, while 72 per cent point to the increasing difficulty of gaining “buy-in” from employees.  

It's not an easy time for CEOs, managers and employees. That's why the majority of companies are bracing themselve for October's Spending Review and opting to ‘stick’ for the meantime rather than go for growth.  

Although the government may insist it’s hard-line approach is what the country needs, it may just be wearing a little thin for those businesses which continue to be balanced on a knife-edge.

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