smallbusiness.co.uk: Helping your business think big

Cover your eyes if you can’t stand any more talk about the downturn. The latest figures from the Office for National Statistics show that between May and June, total sales volumes fell by 3.9 per cent, the largest decrease since records started in 1986.

Food sales dropped by 3.6 per cent, while non-food sales decreased by 4.5 per cent. However, the rising price of food and consumer goods is reflected by the average weekly value of sales in June being £5.1 billion, 3.4 per cent higher than June 2007.

According to Jonathan Davis, MD of financial planning firm Armstrong Davis, worse is yet to come: ‘We’re forecasting an increase in unemployment by 2010 of one million – first the small numbers, estate agents and mortgage brokers, then the medium numbers, bankers and construction workers, then the massive numbers: the high street, leisure, car sales.’

Back in April 2007, Davis predicted house prices would fall 25 per cent, revising that in October to 35 per cent. He says: ‘ Those who have been in business a while will remember banks calling in loans with 30 days’ notice [in the late 1980s and early 1990s]. That will come back.

‘Commercial banks are in dire straits: their share prices have fallen 65 to 70 per cent since the beginning of the year and there’s going to be another leg down. Growing businesses should strive to reduce their corporate debt and cut costs – because if they don’t the other guy will.’