The latest figures from the Department for Business, Innovation and Skills (BIS) show that there are around 4.5 million UK private sector enterprises in the UK, employing 22.5 million people and turning over a combined £3,200bn. Pretty impressive numbers and something that Business Minister, Mark Prisk describes as evidence of the "resilience of British business".
In a bid to protect themselves from the economic downturn of recent years, all businesses have had to make significant changes as well as some very tough decisions along the way. While luck and timing plays a large part in a business’s resilience to recession, it is the choices and changes that businesses make which sees some survive while others unfortunately fail.
The severity of the funding crisis that has accompanied the global downturn has seen this recession claim some very good businesses as casualties. Despite a clear strategy and effective management, even companies which were highly geared at the time of the credit crunch have had the rug pulled from beneath them due to the nature and timing of the crisis.
Those organisations that have fared well – and even grown – in the last few years have done so because they have ensured they are fit for purpose in the context of the current market. They also have a keen eye on how they might need to adapt to tomorrow’s market.
Dr Anthea Gregory, Dean of the University of Wolverhampton Business School, explains; "By their very nature, businesses are not entities that can afford to stand still. There is no blue print for success that can be captured and applied by all businesses. The magic formula is always changing and it’s those businesses that are fleet of foot, constantly adapting to market conditions that survive and even thrive in a depressed economy. The most important feature that successful businesses share is their ability to adapt and stay one step ahead of future challenges."
In May, Business Secretary, Vince Cable issued a warning to businesses of the risks that lie ahead for the UK economy. Despite this uncertain backdrop, a report from BIS shows that new businesses are on the rise, with an increase of 48,000 start-ups in 2010 on the previous year. With fears that the worst may be yet to come for some, these figures may seem surprising.
Dr Gregory comments: "We have to acknowledge the fact that start-ups are often the by-product of recession as people are made redundant and forced to go it alone in the absence of alternative employment. It’s important for the health of the overall economy that as many of these new enterprises survive.
"History shows us that the longer a business is established, the more likely it is to flourish. However, longevity is no guarantee for survival as the victims of this recession have shown us. It’s important however that fledgling businesses get their house in order from the beginning. The basics, such as a sound business plan and tight cash flow management are critical to navigating the early years in business."
The message to business is clear – staying agile is business critical. It also has a direct impact on the wider economy. The ‘fitness’ of all 4.5 million companies in the UK will greatly affect the pace of recovery.