19 December 2013

Winter is make or break time for businesses

Many start-ups go under in the first 3 months of the year, but experts suggest this winter is the best opportunity in five years for SMEs to grow again.

More start-ups go under in the first three months of the year than at any other time, making the first quarter of 2014 a critical time. In the first three months of 2013 more than 3,500 small businesses went into liquidation, 4% more than the quarterly average.

Retailers often rely on Christmas trade for survival, with many small businesses expecting to make at least 10% of their annual sales during the month of December. A disappointing festive period can leave businesses facing tough decisions in the New Year.

But research from the Centre for Economics and Business Research suggests winter 2013/14 will bring in £400 billion of revenue for small businesses in the UK – 7% more than the previous year.

Importance of an online presence

Online shopping will be crucial to the success of retailers with £1 billion a week being spent by consumers buying over the internet during December.

And winter is also a crucial time for manufacturers with firms getting around 24% of their annual turnover in December, January and February. 

The report’s author Colin Edwards, Senior Economist at the Centre for Economic and Business Research, says: “Our research has shown that winter isn’t just an important period for retailers, but is also make or break for education businesses which see well over 27% of turnover fall in the period.

“The unique peaks and troughs resulting from Christmas create both opportunities and risks for all small businesses, with many more liquidations and bankruptcies falling in Q1 compared with any other time of year.”

Optimism for future

Severe winter weather and expensive energy bills can have a negative impact on businesses.

But Angela Needle, Head of Propositions at British Gas, which commissioned the study, says: “Although severe weather of the kind forecast by many could wipe billions off profits, and energy costs are higher in winter, small businesses that we work with up and down the country are feeling optimistic. This winter season looks set to present the best opportunity for five years for UK SMEs to start growing once again.”

To make sure you are in the best position to thrive in 2014, take a look at our tips on taking stock of your business this December