Credit crunch 'pushes SMEs to administration'
Sep 05 2008
A substantial number of small businesses will be forced into administration by decreased sales, according to the British Retail Consortium.
The business organisation says that small and medium-sized retailers are the most likely to be hit by a reduction in consumer spending because they are unable to make savings by relying on the economies of scale which can be exploited by larger firms.
Richard Dodd, spokesperson for the organisation, anticipates problems will also occur for larger firms, whose profit margins may be squeezed, experience issues making investments and be unable to employ as many workers.
Despite job cuts, reduced sales are encouraging retailers to offer special deals to consumers, which could benefit those struggling due to inflation, Dodd comments.
He adds: 'It won't go on forever; ultimately there will be a revival. The question is about who survives and what kind condition they are in at the end of it all.'
Alan Bloom, global head of restructuring for Ernst &Young, told the BBC he is 'pretty sure that during the next 12 months we'll be in some fairly choppy waters'
The business organisation says that small and medium-sized retailers are the most likely to be hit by a reduction in consumer spending because they are unable to make savings by relying on the economies of scale which can be exploited by larger firms.
Richard Dodd, spokesperson for the organisation, anticipates problems will also occur for larger firms, whose profit margins may be squeezed, experience issues making investments and be unable to employ as many workers.
Despite job cuts, reduced sales are encouraging retailers to offer special deals to consumers, which could benefit those struggling due to inflation, Dodd comments.
He adds: 'It won't go on forever; ultimately there will be a revival. The question is about who survives and what kind condition they are in at the end of it all.'
Alan Bloom, global head of restructuring for Ernst &Young, told the BBC he is 'pretty sure that during the next 12 months we'll be in some fairly choppy waters'
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