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Small business stock down 40%?

Chalestra has seen three separate reports over the last two months that suggest that the number of UK small businesses have fallen from 7.5 million in 2006 to 4.5/5 million today, a fall of some 40%. The sources are not verifiable.

If true, then the state of the economy is far worse than anyone has let on. Bear in mind that businesses have cut an average 40% too. And that huge institutions have failed too: RBS, Lloyds, Woolworths, Jessops, Habitat and hundreds of other well know businesses, all since 2006. Perhaps institutions have fallen by the same percentage as smaller businesses. Our thought is that such an environment has not been seen since the last world war.

The immediate thought, of course, is how come so many businesses were lost so quickly. Suggestions run from bad funding, failing sales, failing to respond to a falling economy, huge debts, and so on. Doubtlessly, huge lessons for everyone to learn. In fact, one of the biggest complaints people make to us is that they can't find people to sell to.

And, of course, not enough of them called Chalestra!

What's also important is why this information is been found out only now, instead of much earlier, when businesses needed to know the true state of the economy in order to plan wisely. Information such as this being kept secret is senseless.

And every business can know they're not alone in the achievements they must make in getting on top in preparation for the next recovery.

It also has huge implications for the government too. It's widely accepted that the government has not cut as much as business, but such a report also suggests that the government has become a net consumer of the economy, and the fact that it hasn't got its debt under control leaves it way behind the business community. Although it has been cutting, its deficit has barely changed: which suggest that income is falling, and that lends credibility to the reports we saw.

It also explains why the government can't cut taxes, and not exposing the information explains why leaving the EU, HS2 and such things are at the top of the agenda, instead of business.

On the other hand, if it's not true, then it still serves as an example of why businesses must pay particular attention 'on the falling tide'. The dangers of not responding appropriately to a falling economy are huge, and can leave you in a position where it's impossible to catch up, or recover.

But our view is the same halfway house we always seem to take when there are numerous rumours. We think that things are not as bad as that, but, certainly, it shows the dangers. Our experience of small businesses is that they are still quite upbeat.

But there's also another view. A couple of years ago, we predicted the rise of the cottage industry, and it seems that it is now flourishing. If so, then it might be that official stats have not picked it up. For all the businesses that have fallen, many new, much smaller businesses have been created, and many are thriving. They're the businesses for the future.

Call Chalestra to get your business moving. Our service is successful, friendly and confidential.

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