Findings from a business social networking site, BT Tradespace, have uncovered findings that show small businesses in Scotland are the second-worst hit by the economic slowdown in the UK, rising costs and poor cash flow being the obviously damaging causes.

BT Tradespace revealed that 30 per cent of small and medium businesses in Scotland were failing to market themselves and 26 per cent were helpless when it came to knowing where to turn to for counselling.

These findings come not long after an announcement by Alistair Darling stating that a £4 billion fund from the EIB (European Investment Bank) will be made available to aid small and medium companies.

Managing director of BT Tradespace, Ivan Croxford, said “”Running a small business has never been easy but what we have had is a good 10 years of growth.  Now that the markets have turned and the ‘r’ word is being used, SMEs are finding that the growth strategy they had has now disappeared. The new economic climate requires a new attitude to market, a new perspective. For many it is a wake-up call and it will be back to basics.”

In the UK, 99 per cent of the 4.7 million private sector companies are made up of SMEs employing fewer than 250 people making them a very vital segment of the economy.  13.5 million people work for SMEs, making up almost 60 per cent of private sector employment and SMEs constitute 51.5 per cent of the private sector’s total turnover totalling a gigantic £1.440 billion.

BT Tradespace has announced that the biggest threat to the future of small and medium sized businesses within the UK is the rising energy costs.  The survey went on to show that 83 per cent of small businesses are worried about the increasing price of oil and Ivan Croxford has provided three strategies for small businesses to use to deal with the present high costs – soak up these high costs themselves, look for other overheads to slash, or pass on the costs to the customer.

Whatever small or medium businesses choose, there will be significant repercussions on either their businesses or their customers.  Yet when US based Exxon Mobil recently released a statement claiming a 58 per cent jump in profits to a record $15 billion for the three months between July and September, small and medium sized businesses are surely left wondering why there is such a massively unfair difference between the sectors.

The findings of the BT Tradespace survey resonate a similar message to a recent survery taken by the 3i European Enterprise Centre which discovered that the UKs SMEs are showing difficulties with the shortest financing horizons in any European country.

A Federation of Small Businesses spokesman has said “It has been a tough summer in terms of rising costs and rising overheads coupled with the fuel price bubble which has made it very difficult. But what we are also experiencing on the ground is that in certain key sectors demand is still strong.  The message coming from our members is that we are not going to give up without a fight.”

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