News release

Date: 21st September 2009

Small and medium-sized business owners (SMBs) predict recession will last until Spring 2010, finds Amplify research

The majority of Small & Medium-sized Business (57%) owners think that the UK recession will last until at least next Spring, according to a survey conducted to online communications specialist Amplify.

The downbeat prediction is just one finding of wide ranging ‘SMB economic indicator’ market research which Amplify conducted during July 2009.

When asked, with the benefit of hindsight what SMB owners would do differently if they saw the recession looming again, the majority (43%) said that they would have put a much greater emphasis on sales and marketing; whilst nearly a third (31%) said they would have cut staff quicker and deeper.

This is despite the fact that nearly half of the sample (45%) have already made some redundancies in the first half of the year: a third of respondents shed up to 10% of their workforce and 12% let more than 10% of their staff go. These are dramatic findings for SMB operations, averaging 27 employees, representing most sectors of the economy and based throughout the UK.

Unsurprisingly, 55% of SMB owners say their business’ success is inextricably linked to the health of the wider economy. But perhaps more worryingly, over a quarter of the sample (26%) expects their businesses to be hit after the wider economy begins its recovery. In other words now that we are moving into the latter stages of this downturn they expect to be hit the hardest.

SMBs’ sales order books took the hardest battering in Quarter 2 2009 (April-June 2009) out of the last three quarters for the largest group (38% of the sample). But 26% saw Quarter 1 2009 as the worst period of trading to date while nearly a third (31%) have seen no real fall in orders over the last nine months which is impressive.
A quarter (24%) of businesses had seen sales fall by up to 10% and a further quarter by 11-20% in the first half of 2009. A fifth of SMBs (19%) reported a drop in sales of over 20%.

That said, the majority (38%) predicted that business income falls will slow down in the next six months and over a quarter (26%) even said they felt the downward curve would stop completely by the end of the year. A tiny minority (5%) thought things would get worse through to the end of the year.

SMB owners are still not good at selling and marketing their services by their own admission. Over a fifth (21%) had no systems for collecting and managing records or staying in touch with prospects at all. Nearly half the sample (48%) relies on Excel spreadsheets or Microsoft Access databases to store and manage prospective customer records. Very few had proactive and reliable systems for keeping in touch.

The majority (43%) admitted that any systems they did have were not well integrated with Microsoft Outlook or other email systems. Face-to-face meetings and email remain the two key methods of keeping in contact with prospects (very similar to customers themselves) which indicates huge scope for efficiency as face-to-face meetings are well-known to be the most expensive method of keeping on a prospect’s radar; whilst email, because of the escalating numbers that we all receive, are not meeting with the attention they need or deserve.

However all is not lost for SMBs as nearly half (43%) are now investing in improving their websites. 57% are slashing costs to increase sales and over a third (38%) is doing more sophisticated business development work including establishing new partnerships and joint ventures.
Responding to the survey Stephen Alambritis from the Federation of Small Businesses said: “It is hugely reassuring to learn that more small firms are investing in improving their website. As the home market struggles to recover it is important that businesses appeal to international patronage. The global economy has meant the death of distance in commercial transactions and what better way to take advantage of this phenomenon than to invest in online collaboration.”

On Social Media, the majority (29%) were already seeing it as a good Business-to-Business Networking tool (e.g. LinkedIn and increasingly Twitter and Facebook). Over a quarter (26%) only saw Social Media as valuable for those selling consumer products directly to them. Nearly a fifth (19%) simply said that they did not know how to use it positively in their businesses and 17% went further to say that it was a ‘big waste of time for SMB owners’ and 10% thought it was something which was led by ‘kids with too much time on their hands.’

David Holt, director of contact management at Amplify, commented on the findings: “Although many of SMB owners’ experiences in this downturn are unique there are some common threads. Firms that have read the market well are thriving despite the economic gloom. Success is also coming from getting closer to customers and seeking more feedback, more regularly on what they want. A small number of SMBs are capitalising on some of the major shifts that are happening in the way businesses and individuals buy even the most specialist goods and services. We think many more should take the plunge.

“We argue that the heavy reliance on telesales, outbound email and face-to-face meetings must be supplemented by a mixture of internet-based ‘pull’ marketing techniques which have matured in recent years. The average SMB has more than 30 prospects at any one time, any one of which they could reasonably expect to do business with in the next six to 12 months as the gloom lifts. But what are businesses doing to foster those relationships, remind them of their credentials and capabilities and keep these vital relationships alive?

“There is no doubt that some online collaboration and social media strategies integrated with corporate websites and email can really help keep SMBs in front of their prospects and keep the lifeline of new business flowing in through tougher economic times.”

-Ends-

Notes to editors

Amplify commissioned a survey of 4,000 Small and Medium-sized Business (SMB) owners with turnovers of £1m-5m and staff levels of between 5 and 50 people. Average number of employees per respondent company was 27. The research was conducted via an online survey distributed and responded to between 3rd and 21st July 2009. The response rate was 1.07%.

If you would like to interview Amplify’s David Holt on the survey findings and wider implications or interview respondent firms quoted in the press release please make contact with Miles Clayton on 01992 587439 or Simon Bennett on 01992 586232 in the first instance or email miles[at]agilitypr[dot]co.uk

Agility PR has had closer dialogue with 5 respondents to the survey to gather more details and all of these have all agreed to attend media interviews if requested. Please state if you would like to involve any of these commentators. Details and quotes from them are carried on a separate page.

About Amplify
Amplify offers a range of services designed to help SMBs manage customer and prospect information effectively and harness this information to communicate and collaborate with customers, partners, suppliers and prospects.
Amplify Value delivers leading-edge, hosted CRM software at affordable prices and is based on Microsoft Dynamics CRM 4.0.

Amplify Voice provides an engine for automated, branded electronic newsletters using RSS news streams, Blogs, direct messaging and links to keep in touch with customers and prospects without bugging them. The use of RSS technology allows SMBs to publish online feeds and dynamic website content into your newsletter meaning the effort to create a regular newsletter service is reduced dramatically.

Amplify Vision uses Microsoft Office SharePoint Server 2007 (MOSS) as a platform to bring information, people and processes together. MOSS organises this around people and the way they work.

Amplify Virtual simplifies the myriad of Web 2.0 sites and delivers a platform of appropriate Social Media sites that will improve brand awareness, generate traffic to SMBs’ websites and improve the ranking of SMBs’ websites on search engines. This is the solution for firms looking to embrace the benefits of pull marketing.


For further sales information about Amplify please contact:
David Holt, Director of Contact Management, Amplify
Mobile: 07900 696 845 or email him at amplify[at]dthomas[dot]co.uk or go to Amplify blog at http://www.dthomas.co.uk/amplify/blog/index.htm to get into dialogue with Amplify’s online community.

For further information for the media about Amplify please contact:
Miles Clayton, Managing Director, Agility PR
Tel: 01992 587439, Mobile: 07799063398 or email him at miles[at]agilitypr[dot]co.uk


Commentary from respondents to the Amplify Survey
Supporting telephone interviews yield some of the reasoning behind the mixed picture: Kate Jerrold, director at Robert Mills Ltd, a retailer of architectural antiques found, as the economy took a turn for the worse and the pound dropped against both the US Dollar and the Japanese Yen, sales in these countries increased. The downturn has led to real growth for Robert Mills Ltd as Ms Jerrold explains: “As a small business we have not got the budget for widespread advertising or ’Push Marketing’ as it is sometimes called, we really need to ‘pull’ potential customers in our direction and we increasingly seek to do this online because its proving cheaper and more effective. This means using the right language for the search engines – so ‘architectural reclamation’ in the UK becomes ‘architectural salvage’ in the US.

“What is also noticeable is that a new generation of Japanese business people are tending to source our goods direct via the internet rather than through traditional import/export trading houses. We use eBay for some of our lower value items to push our SEO (Search Engine Optimisation) ratings and I even have a presence on social media sites MySpace and Face Book for customers that want to discuss our products and need reassurance before buying. It’s very hard to keep up with the many and various ways that customers might want to reach us but we aim to be open and intelligible through all channels – via phone, post, email, social media sites and our website. It’s a lot to keep up with.”

Paul Mizon at design company Oakbase paints a bleaker picture following a reduction in sales volumes of 30% in the last six months: “This recession will be deep and long, possibly lasting until 2013. The scale of the debts that the Government is clocking up are simply unsustainable and quantitative easing will come back to bite us until we have personally paid back this debt through higher taxes and less public spending. I predict interest rates moving back up to 5% and inflation will be running at up to 7% within 18 months, unemployment levels will rise to 3.5 million before they start to reverse. Banks will pull the plug more readily on businesses and households carrying too much debt. SMEs everywhere are bunkering down and preparing for a long haul. Cash is king for the foreseeable future.”
The only bright spot for Mr Mizon comes from the fact that larger firms are likely to review larger budgets for marketing services, dispensing with expensive fee-based suppliers and this generates opportunities for smaller suppliers to pick up some of this business.
Stephen Farbairn of builders’ merchants and horticultural supplies wholesaler based in the North West, Henry Alty Limited, explains how the recession has hit his business: “The builders’ merchants side of our business is 20% down compared to a year ago simply because smaller builders which tend to do building improvement projects in the domestic market have less work to do. The consensus in this area generally is that most construction-linked businesses are at least 10 per cent down. Larger builders that are dependent on Housing Association funding are finding it just as tough.”

Alty has avoided making redundancies by keeping its eyes and ears open for potential building projects and keeping close to its customers, generally by phone and face-to-face contact locally.

Chartered surveyors Curtis Blain, based in Pembrokeshire, Wales, decided to shift its efforts out of areas where it was likely to sustain losses (including an estate agency operation) in the downturn and instead offered its services proactively into a new sector which showed real promise locally – leisure. Allan Curtis, Director, Curtis Blain, explains: “We guessed that in a downturn many more UK residents will be holidaying in the British Isles and thus the leisure sector will be gearing up for this increased demand. We went to talk to those in charge of projects to improve leisure centres, resorts and hotels and offered to help them with conceptual design, cost analysis and planning issues. We were right. We picked up seven new leisure clients and this has been enough to generate 20% growth this year.”

Integrated technology marketing firm Mason Zimbler, unlike generalist agencies, had experienced a similar bubble in the IT market with the dot.com rollercoaster in 2001-3, and so saw the downturn coming. James Trezona, MD, said this helped them plan ways to not just survive the downturn, but come out stronger:

“Like most agencies we had been spending a significant proportion of our top peoples’ time pitching for new business. Last year we cut that close to zero and devoted all our attention to servicing our existing clients even better - creating new processes, new products and innovating to prepare for the storm. We were seeing troubled competitive agencies slashing prices and acting with short-term desperation, so all our efforts have been devoted to giving our existing clients every support in this tough time, when they had fewer internal resources, adding more value proactively than ever, behaving more responsively than ever and ultimately making ourselves indispensable to them.

“As a strategy it definitely worked. For example we work with one major IT company that slashed marketing budgets by 40% across the board but actually ended up spending more per month with us. Inevitably we have lost some clients to retrenchment, but our recession strategy has protected our revenue-base and even provided a platform for modest growth. So our people are safe and our clients are receiving the added support and Return on Investment they need in this tough market.”

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