UK Business Barometer

Thursday, December 18th, 2003

November's survey commenced with questions on profit margins, cash and borrowing requirements. It also sought views about whether call centres affect business arrangements, on changing banks, efficient meetings and email.

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About the respondents

174 respondents were drawn with the following population characteristics:

Sector
Production & Manufacturing	Distribution	Services	Total
30.5%	7.5%	62.0%	100.0%

Turnover (£)
< 1 M	1M-3M	>3M	Total
68.4%	20.7%	10.9%	100.0%

Number of Full-time Employees
1-10	11-20	21-50	51-100	100+	Grand Total
54.5%	32.8%	6.9%	2.9%	2.9%	100.0%

1. Profit margins have been under substantial pressure over the last six months with 58% of respondents reporting that pressure has increased substantially or a little. However, this is a significant drop compared to last November's 72% in these two categories. 29% this year say that pressure was unchanged, compared to 22% last year, and 13% found that pressure was reduced either a little or substantially, compared with 6% last year.
2. Looking forward, a number of respondents are more optimistic, with fewer expecting pressure to increase substantially, only 10% this year compared with 20% last year, and 19% expecting it to fall a little, compared with 12% last year.
3. Cash holdings and bank deposits have changed only marginally from this time last year. Last year 34% said they had fallen a little over the six month period, while this year it is 29%, and there have been small percentage increases in those with unchanged cash and those holding a little more and substantially more.
4. On the borrowings side, 2% less than last year say their borrowing fell either a lot or a little in the last six months, while the percentage that say borrowing was unchanged increased by 2%.

5. The relationship with the bank was confirmed to be very important for many businesses, especially smaller ones, and we asked the question both to UKBB respondents and to the Business Advisers who complete the parallel UK Business Advisers Barometer Survey (UKBAB). It is very important to 64% of UKBB respondents, with a further 22% saying it is important. A total of 92% of Advisers say it is very important or important to their clients.

6. Call centres are not popular with respondents of the UKBB and the UKBAB. Although 6% of UKBB and 5% of UKBAB think that call centres improve the efficiency with which business arrangements can be made, no UKBB nor any UKBAB respondents believe that efficiency is significantly improved. By far the majority believe that efficiency is reduced or significantly reduced (total 82% UKBB, 79% UKBAB)
7. The next three questions concerned changing banks. A higher percentage this year (38%) compared to last (32%) have seriously considered changing banks.

8. 60% of UKBB and 65% of UKBAB respondents still believe that it is difficult or very difficult for business to change banks, while only 22% of UKBB and 28% of UKBAB think it is straightforward.

9. The ease with which banks can be changed is not really believed to have altered much in the last year. There was close agreement between the findings of the two surveys: 48% of UKBB and 50% of UKBAB respondents think it is the same, while 13% of UKBB and 14% of UKBAB think it is actually much more difficult or more difficult than a year ago.

10. New technology is not yet substantially contributing to the way in which meetings are taking place. 9% of UKBB and 4% of UKBAB use conference call, loudspeech phone, video link etc weekly or more frequently, while 49% of UKBB and 54% of UKBAB never use any of these.

11. The reason for the lack of take up of alternative meeting modes may be because not many think they are an efficient means of communication, although 15% of UKBB and 10% of UKBAB respondents think they are more or much more efficient. 43% of UKBB and 41% of UKBAB think they are less or much less efficient.

12. Recently it has been reported that some large companies and organisations have introduced measures to reduce volumes of emails received and sent by staff. The question of what is the pressure on time, caused by emailing, prompted the final question in the November Survey. We found that 17% of UKBB respondents spend a daily quarter of an hour clearing it, while 35% spend 15 - 30 minutes and 31% spend 30 - 60 minutes on it per day. The remaining 17% spend longer than an hour every day clearing their email. The results from the UKBB were fairly close to those from the UKBAB, as shown in the chart below.

Listed below are extracts from feedback received in Survey BB66 November 2003.

Comments are listed under sector headings.

Views expressed are those of individual panellists and may not represent those of the University.

Production & Manufacturing
Conference calls only work if the participants know each other. A face to face first is invaluable.
Principal cause for deteriorating profit margins is the weakness of the pound against the euro pushing up imported goods prices.

Other
My care home business is grossly over regulated by the Care Standards Commission, the extra paperwork does not improve the service I deliver to clients, on the contrary it erodes time for training and supervision. Minimum wage has driven up wages costs, meaning I cannot recruit easily without offering higher wages, quality of staff has not improved. Morale and energy very low!

Business Services
emails are making people too accessible I have recd over 350 emails so far in November
While having a well informed point of contact at the bank is very important it is most unusual to find one. If the banks really employed people who could understand my business they would probably be out doing it for themselves!
e-mail has become the bane of all of our business lives. It is the memo of this century that everyone hides behind. I truly hate it
Re bank and changing banks: I am not altogether pleased with my bank, but I ask myself ias it worth changing, as I have no confidence that any other is better !
Re Call Centres I understand the financial reasons for switching Call Centres to countries such as India, but if the Customer cannot understand the staff, he may well be tempted to use another supplier next time.
The use of call centres and IVR by banks increases the efficiency for routine or mundane transactions and tasks. For more unusual tasks it is always better to be able to speak directly to somebody who knows what they're talking about, preferably a named contact, and to be able to get to that person with the minimum of time-consuming people-navigation.