180 businesses per day to go bust in 2009!

[silverlake77]

I hear on Sky news this morning some boffin from a London financial academy talking about at least 180 businesses per day will go bust in 2009, i found this a staggering amount.
I make that at least 65,700!!!

Everybody is probably sick and tired about hearing how hard its going to be in 2009, but the more things hear like this, the more i think 'I'm going to be out of work very soon'.

What is the mentality of you guys?
Are you reconsidering your business altogether?
Or is it a case of lets plough on, invest more, and see how far we get?
Or do we keep our heads down and hope for the best?

I've been scratching my head for a while on this one
Cheers
John

 

[Matt1959]

well for every business going bust, theres loads that will keep going or prosper. Why do people automatically think they're going to be on the losing side?

 

[sysops]

I hear on Sky news this morning some boffin from a London financial academy talking about at least 180 businesses per day will go bust in 2009, i found this a staggering amount.
I make that at least 65,700!!!

This is the kind of statistic that really annoys me. It is totally meaningless. Businesses go bust all the time, even at the best of times. How many went bust in 2008? 2007? 2006? without those numbers, your statistic means nothing.

What is the mentality of you guys?
Are you reconsidering your business altogether?

We're basing our (Q1) buying on 30% growth in 2009.

 

[David Griffiths]

The reality is that even in normal trading circumstances many businesses collapse within two years, and not many make ten, or even five.

If you've got a sound business base, then there's nothing to be concerned about. Don't forget that a recession is, perhaps, 2% less business out there. If 10% of businesses go out of the market, then that leaves 90% to chase 98% of the business! Where's my half full glass, by the way?

What does he mean by every day, in any event? Seven days a week, or the number of working days in a week, or the number of days that a boffin at an academic institution works?

Different boffins produce different numbers - here

 

[silverlake77]

Thats sense Dave

 

[telemax]

Some of these "Boffins" that they wheel on to the news are full of it, these statistics should be compared to the number of businesses that go bust every day in a "boom" year. I bet the numbers wouldn't be that different.

For me personally, If the last few months are anything to go by, 2009 will be a great year!!

All the best

Jonathan

 

[directmarketingadvice]

I hear on Sky news this morning some boffin from a London financial academy talking about at least 180 businesses per day will go bust in 2009, i found this a staggering amount.
I make that at least 65,700!!!

Well, if he's an academic, the one thing you can be sure of is that he'll be wrong.

Too high or too low? I've no idea, but I'd attach zero value to his opinion unless he's got a track record of being able to predict this sort of thing in hte real world.

What is the mentality of you guys?
Are you reconsidering your business altogether?
Or is it a case of lets plough on, invest more, and see how far we get?
Or do we keep our heads down and hope for the best?

Well, we marketers are doing fine. In times like this, business owners pull their fingers out and put their marketing in order.

For "normal" businesses, it can be a different matter. However, look at this rationally:

Imagine the economy contracts by 5% in 2009. So what? It's only 5%.

In some industries, it'll be really grim. However, in others, the changes will be next to nothing.

(as 5% would be an average across the whole of the economy)

And, even if you're in an industry where it contracts 10%, how hard is it to increase sales by 10%?

Do a few simple things in your marketing (e.g. split-testing your web pages, mailing your customer list more often, adding a referral or affiliate programme etc.) and 10% is eaasy.

For the vast majority of businesses in the UK, whether they survive 2009 will come down to whether they get their **** together with their business and their marketing, rather than what happens in the economy.

Just my 2p,

Steve

 

[garyk]

Well, if he's an academic, the one thing you can be sure of is that he'll be wrong.

Yep bang on with that statement I'd say Steve, his theories are based on conjecture and some sums which are unproven I would wager.

 

[jane p]

we sell quality food, you cant get some of what we do elsewhere and some people like quality and the shopping they can get from us! Also we give help and advice which you can only really get by coming to us!

So hopefully we will survive.

 

[Edward Moss]

This time of year is usually a very quiet time for news so any reports form academics are pounced upon and made into something more than it is.

There was a lead story on Radio 5 a few weeks ago about child trust funds, saying they had lost 20% of their value since launch in 2002.
Meaningless story, as they don't mature until 2020 so the loss is a paper loss. The real story will be what they will be worth in 2020, as the government statement correctly said half way through the report.

 

[saracen]

keep thinking positive and never miss your breakfast

 

[silverlake77]

Is it more the fact that people will stop spending, rather than the economy shrinking by a percentage?
We rely on the general public to put there hands in their pockets and pull out some money to buy, lets say a set of dining chairs.
Business to business if the shrinkage in the economy is 5% or 10% then it will be a kick in the balls but no more.
However if the general public stop spending and tighten their belts, which they are doing, and people keep losing their jobs at a high rate, which they are doing, everybody will just stop spending, effecting retailers first, then filter down through other sectors later in the year or in 2010.
Its OK saying ' i run a marketing company and I'm doing OK right now as businesses put their marketing in order', what happens after the marketing fails?

 

[stevon]

That's a lot... But 471,500 businesses were started in 2007. The highest since records began (in 1988).

That's nearly 1300 per day.

Then again, 498,900 closed in 2007.

With a lot of people losing their jobs and having commitments, there's bound to be an increase in businesses starting up. With large businesses struggling, it brings with it threats to the suppliers of these businesses but also the opportunity for new entries into the market and for those suppliers to diversify into other markets, potentially supplying themselves at a more cost-effective rate.

Regardless, there's a lot of turmoil ahead. That's for sure. But it's in this type of environment that the opportunities are at their best. Someone who doesn't panic and see's this as an opportunity, as opposed to a threat... They'll be the ones rising from the ashes.

 

[sysops]

Is it more the fact that people will stop spending, rather than the economy shrinking by a percentage?
We rely on the general public to put there hands in their pockets and pull out some money to buy, lets say a set of dining chairs.
Business to business if the shrinkage in the economy is 5% or 10% then it will be a kick in the balls but no more.

Again, this is meaningless.

First, people don't just "stop spending", they reduce their spending by a %. A small %.

Second, all aspects of the economy are connected, so you can't say that b2b will be affected less than b2c, because at some point the chain ends with the consumer.

Your understanding of business matters is shocking. Are you new to all this?

 

[SLF]

apparently around 70% or more businesses fail within their first 3 years of start up,. and nothing to do with the economy. I ignore thios credit crunch malarky, as it doesnt affect everyone but those it has affected its affected badly. I drove past 2 retail centres today and they are jam packed with cars, queues a mile long for the sales. Not a sniff of lack of cash.

 

We are expecting some decent growth this year, as was the case last year. I did put a lot of effort in over the past few months to get our name out there a bit more, with a bad 2009 in mind, but I still reckon all will be well.

Yes, some businesses will fall by the wayside, mostly those running on others money. we'll take up the slack from our competitors who drop and be happy about it.

2009 will definitely be doom and gloom all over the place, but anyone who doesn't see the opportunity this provides the small business is not looking hard enough.

 

[silverlake77]

Sysops.
No I'm not new to all this, thanks.
You seem to be forgetting that as the economy is shrinking, the cost of living is escalating very fast.
Hardly anyone is getting new mortgages, many people are in negative equity, record levels of repossessions, record levels of debt are still in place, house sales are at record lows, the cost of utility bills are soaring, food prices are going up, the dollar is so weak all imported goods from the far east are going up 30%, unemployment is escalating at incredible rates, i could go on. This is the worrying thing, not rattling on about percentages, your short sightedness is shocking! Are you new to all this?

 

[sysops]

You seem to be forgetting that as the economy is shrinking, the cost of living is escalating very fast.

Not true at all. Oil prices will remain low for the next couple of years. This means the cost of living will actually be lower in 2009-2010 than in 2007-2008.

Additionally, property prices will continue to fall, which will further reduce cost of living.

Hardly anyone is getting new mortgages, many people are in negative equity, record levels of repossessions, record levels of debt are still in place, house sales are at record lows, the cost of utility bills are soaring, food prices are going up, the dollar is so weak all imported goods from the far east are going up 30%, unemployment is escalating at incredible rates, i could go on. This is the worrying thing, not rattling on about percentages, your short sightedness is shocking! Are you new to all this?

Seems to me you are looking for someone to blame for your failing business?

As others have explained (very eloquently, I might add) a contracting economy is not the end of the world, and in fact creates a lot of opportunities.

We operate in a luxury sector, which is traditionally seen as being very vulnerable to hard times. However, we run a very tight ship, and expect several of our competitors (who aren't as efficient) to go under, leaving wide open gaps.

As for the pound's current weakness - yes, that is a real PITA, but again, isn't forever. The USD is just a few months behind us.

 

[stevon]

Who told you hardly anyone is getting new mortgages? There's a higher % up front, yes, but loads of mortgages are going through every day. The rates before were unsustainable... People are also more readily to sign up to insurances to protect themselves as well. So instead of spending money they don't have in Primark or whatever, they're paying £30pcm on protection so that when/if they lose their jobs - they're not up the creek without a paddle!

I don't think people on £15k a year should ever have been getting £100,000 mortgages anyway. Or £20k loans for cars to be repaid over 3 years. Or 5k limit credit cards... Maybe one, but not ten. But that's just how people seem to think they're going to get through life. People and businesses. Unfortionately.

 

[trilby274]

Going back to the original question, I don't think he has got it right either. I believe that a lot of mergers and acquisitions will take place, particularly in the small business community. Many of the medium sized businesses in my sector are already going down that route - and very sensibly so in my view. Certainly, this leads to job losses but in a buyer's market, that is ever the case.

I think 2009/10 will be a period of consolidation with people giving much more thought to their financial position than has been the case over the past five years.

 

[estwig]

These doom and gloom threads about the economy are becoming very tiresome!

 

[wood1e2]

will that be by the end of 2009 or will it be in real time? Also how many will actually go under never to return and how many of those will be phoenixed?!?!

 

[sysops]

These doom and gloom threads about the economy are becoming very tiresome!

Indeed. All business is based on optimism. Without it, there really is no point - if you don't think your business will make money in the next 12 months, why bother? Give it up and get a job.

If you start off with the attitude that things are going to be very tough, that there are no opportunities, and that you are doomed, you can guarantee that you won't do well. You won't take the chances necessary to make your business work.

I you really are that way inclined, then running your own business is not for you.

This isn't to say I'm advocating an ostrich approach - if what you are doing isn't working, you need to change it so that it works. You need to keep right on top of the numbers, and be completely aware of how your business is doing.

 

[silverlake77]

Indeed. All business is based on optimism. Without it, there really is no point - if you don't think your business will make money in the next 12 months, why bother? Give it up and get a job.

Sysops,
What about all the new starts who probably know they won't make alot of money next year?
What about all the companies who have been established for decades that know they wont make profit next year?
What about the companies who employ many people who will operate on a loss next year just to keep going and get through it?
What about people who arn't making money but 'believe' they will?
Should they all give up and get jobs? Or be more optimistic?
A Slight contradiction wouldn't you say?
I think you need to be more apathetic with the world around you, its not so cut and dried as 'well I'm not making money right now so I'll quit'
Luckily were are long established and business is good, but for some its not that simple.

 

[Tom McClelland]

An interesting prediction to go with that one would be the number of new startups in 2009. That would put the number of folds into some kind of perspective.

 

[sysops]

I grow weary of your words.

My "give up and get a job" comment is clearly aimed at the person running the business. If the MD can't find it within him/herself to be optimistic, the best option is to give up. Being optimistic doesn't mean "we'll just carry on, and all will be ok". It means "let's see what we can do to make the business work". It's about developing new products, reaching new customers, building new relationships.

You have contradicted yourself, in your OP, you said:

Everybody is probably sick and tired about hearing how hard its going to be in 2009, but the more things hear like this, the more i think 'I'm going to be out of work very soon'.

In this post, you say:

Luckily were are long established and business is good, but for some its not that simple.

Which is it?

 

[silverlake77]

It was a statement designed to get the thread moving, not a reflection on my own company.
As for growing weary of words, yawn, tell me about it.
Good luck in 09, i cant wait to see how you do, i hope your attitude carries you through.

 

[willitbe]

Sysops, Are you Ling in disguise? .

Judging by the OPs other post about needing to have a new product to sell, i would suspect things aren't all good!

 

[sysops]

Sysops, Are you Ling in disguise? .

I'm almost speechless...

 

[silverlake77]

Why does Wanting other products to sell signify trouble?
If anything it signifies a profitable business branching out with money to invest and diversify, I'm not greedy but its good to have a few things going on wouldn't you say?

 

[Tej]

Indeed. All business is based on optimism. Without it, there really is no point - if you don't think your business will make money in the next 12 months, why bother? Give it up and get a job.

If you start off with the attitude that things are going to be very tough, that there are no opportunities, and that you are doomed, you can guarantee that you won't do well. You won't take the chances necessary to make your business work.

I you really are that way inclined, then running your own business is not for you.

This isn't to say I'm advocating an ostrich approach - if what you are doing isn't working, you need to change it so that it works. You need to keep right on top of the numbers, and be completely aware of how your business is doing.

There is a lot of truth in this.
If you have not got the "get up and go" attitude.. then business is not for you. Positive thinking has got to be the byword all the way.

 

[Chris Ashdown]

Basically its the time to really inwardly look into your company, find any savings you can be it purchases or overheads, look at suppliers what happens if one or more go under how will that effect you

Cashflow is the killer for most companies especially those trading with other companies (B2B) so make every effort to chase invoices and reduce the number of account customers if possible.

Forget other peoples numbers and percentages according to the paper the average wage is £25000 in my area Great Yarmouth you would be lucky to find many people earning that. just consentrate on your own predictions

Having been through two recessions before it is time to worry, goods produced oversea's will rise very significatly to make up for the devalued pound

Can you survive Most will, but before most companies came out very much leaner, the slow adaptors never made it

Good Luck

 

[Tej]

For any business in the present economy, the centuries old saying ( my favourite) still holds good

Spend NOT where you MAY save
Save NOT where you MUST spend.

 

[stevon]

Sysops, I'm in total agreement with most of your points and like what you're putting across... But:

"Not true at all. Oil prices will remain low for the next couple of years. This means the cost of living will actually be lower in 2009-2010 than in 2007-2008."

How do you know this?

I think it's Iran who have asked (last month) for a bigger price floor to be introduced between the twelve OPEC counties, so that they can sustain themselves and prepare other sectors for when the arse falls out of oil and we finally move to something else. Countries such as the UAE have done a great job of creating a sustainable economy long after oil, but many have not and are now looking to use the oil cash to fund rich developments in construction, tourism, etc.

Sadad al-Huseini, who was the head of exploration and production at Saudi Aramco stated a few months ago that the minimum price of oil will rise by at least $12 for the next 4-5 years. It makes sense really... The oil isn't flowing out the ground in the fields that have been prepped for drainage - so it's becoming harder and more expensive to get the oil out the ground... So the cost of extraction per barrell goes up. The Arabs don't want to make a smaller margin (afterall, why should they?) so the price per barrell on the market goes up. He reckoned that by as early as 2010... Crude oil would be $125pb. If the demand falls, they'll cut production - they won't keep the supply the same and cut the price, they'll cut the supply, increasing the demand and make more money out of each barrell, but less money overall probably. But they're not too bothered because that way their oil will last longer!

OPEC also agreed to decrease their output by 2 million bpd - the biggest reduction ever. Russia and Azerbaijan also agreed in principle.
However, the demand for oil will slow - with economies slowing. Which with the supply being cut, won't make the prices too much higher - but they'll be higher. And when they cut production again (they will) the price will go up until they find an equilibrium. Basically, they've got everyone over a barrel!!

The only chance of oil prices coming down are if the Government lower their taxes on it. But with all the debt they're running up, it's got to come from somewhere and petrol will be hit hard, like it or not.

So really, petrols going up. Which means the cost of living is increasing.
That being said, we aren't all doomed to saving up for months to fill up the car or anything as some seem to be suggesting. Although if someone knows anything about oil prices going down that I don't I'd welcome the news!! Personally, I don't think they're going to get too much lower (maybe a few pence) and they'll be shooting up a lot faster than they've came down.

Couldn't agree more with the points about the MD having to be the driving force behind the business, if he/she is losing faith then it's a waste of time.

 

[sysops]

Sysops, I'm in total agreement with most of your points and like what you're putting across... But:

"Not true at all. Oil prices will remain low for the next couple of years. This means the cost of living will actually be lower in 2009-2010 than in 2007-2008."

How do you know this?

I don't know it for certain, not by a long way, but it's my best current guess

OPEC have to cut production, if they didn't, prices would soon fall below $30 because of falling demand.

You have to view this situation from OPEC's pov. The last thing they want to do is worsen the global downturn. But at the same time they need to maintain prices for their producers. They will aim to hold prices at the highest levels possible without the risk of making things worse globally.

The very high prices we saw in 2008 were purely speculative, and I said so at the time. That bubble is now dead.

The only thing I can think of that could possibly blow this scenario is war with Iran, but I don't think that's all that likely in 2009.

 

[stevon]

Me neither.

I don't think the current prices are sustainable either... I reckon we'll be paying about £1/litre throughout 2009 for our petrol at the pumps. The current prices are too low for OPEC and the prices we witnessed not so long ago were too high for Joe Bloggs.

Either way, I personally think it'll rise. I *hope* it falls though

 

[3babies]

I am working really hard to make sure my business is not one of those to go Bust. I made some silly choices when setting up my business in 2008 but I am working to keep it going. I think this is going to be my motto for 2009

Spend NOT where you MAY save
Save NOT where you MUST spend. (thanks TEJ)

 

[Alison Jones]

All of the retailers who have gone bust are ones that expanded too fast and spent too much money they did not have available ie run up debts they could not afford to repay.

Companies who are sensible in what they spend will not go bust. Small businesses will survive more so then the bigger businesses.

We opened a new business very recently and we won't let the credit crunch affect us, it is all down to attitude, if you stay positive then credit crunch won't affect you but if you are negative and you will let the credit crunch affect you.

Alison

 

[SLF]

@ AlisonJones

All of the retailers who have gone bust are ones that expanded too fast and spent too much money they did not have available ie run up debts they could not afford to repay.

how do you know this? I wasnt aware Woolies, Whittards, or MFI had expanded too quickly....or have I missed something this past 20 years?

 

[Matt1959]

it is all down to attitude, if you stay positive then credit crunch won't affect you

blimey your not Ashley Prices sister are you:|