University of Nottingham (c)2005
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Thursday, March 9th, 2006

Survey BB93 February 2006


February's survey sought panellists' views on increases in energy prices, price setting, Diversity training, team building, fuel expenditure, research & development expenditure, the Job Centre's 'work/trial' scheme, late payment, seeking additional finance, cigarette breaks, 'Enterprising Britain' and the best way forward on waste.

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  • About the respondents

    The UK Business Barometer surveys the people running small and medium size businesses. In the February 2006 survey 138 respondents were drawn with the following population characteristics:

    Sector
    Production & Manufacturing Distribution Services Total
    26.1% 8.0% 65.9% 100.0%


    Turnover (£)
    < 1 M 1M-3M >3M Total
    70.3% 17.4% 12.3% 100.0%


    Number of Full-time Employees
    1-10 11-20 21-50 51-100 100+ Grand Total
    61.6% 23.9% 7.2% 3.6% 3.6% 100.0%


    Survey Findings

    Real (adjusted for inflation) prices for non-domestic consumers of gas and electricity in the UK rose over the year to Q3 2005 by between 10 and 40 per cent, whether the Climate Change Levy is included or excluded from the comparison.

    26% of respondents to the February UKBB survey are in production and manufacturing, a sector whose small and medium users have experienced increases in gas prices of 24 - 26 per cent and in electricity prices of 21 - 31 per cent in the year to Q3 2005. More increases have been announced since then. Average real prices to businesses in this sector for HFO went up by 46 percent and for coal by 10 percent over the same period.

    42% of respondents expect these increases to impact highly or reasonably highly on their businesses, but 33% expect no or very little impact.



    Although 15% of respondents expect the energy price increases to impact highly on their businesses and the costs of energy to their businesses is actually above 10% of turnover for 6% of respondents. For 66%, costs of energy represent less than 5% of turnover.



    Various studies have established links between Research and Development and company performance, such as that higher R&D; intensity results in higher sales growth, providing that the R&D; is wisely directed. The dti produces a Scoreboard for R&D;, based on results of the top UK companies, and includes a calculation of an overall average R&D; intensity (the ratio of R&D; to Sales). For 2005 this was 2.0% for the UK, using sector weightings.

    After adjusting for 'not applicable', the ratio of R&D; to turnover for 35% of respondents to the February Survey is above 6%.



    The right pricing strategy is generally acknowledged to be key to business success. There are many options for pricing and the choice of strategy will be dependent on market circumstance and context. The February Survey asked panellists to indicate one type of strategy from four main options and also included a fifth category, 'other'. The influence most persuading 41% of respondents was that of competitors' prices, while 28% were mainly influenced by the level of demand for their products or services.



    Diversity training is widely believed to bring benefits to business, such as improved team-working, motivation and productivity. There are also enormous pressures on organisations to increase diversity amongst employees, there many companies offering to provide specific diversity training, and very many companies are now providing some diversity training for their workforce. Effectiveness is another matter and 22% of respondents don't feel that diversity training has or would be beneficial to their organisation, although 37% do. A large percentage, 41%, doesn't know.



    An organisation that has built itself into a strong team is equipped to work more efficiently towards the common goals of that organisation. Building a strong team requires different types of activities according to the objectives and the number of people involved.

    Respondents whose companies have 10 or less full-time employees were more likely to have never used team building activities (just over half of the 40%) or to have selected 'not applicable' (26% of the total). Amongst the rest of the respondents the most frequently selected timing was six monthly for team building events.



    Job centres are offering a 'work/trial' scheme, which allows individuals currently receiving benefits to be given a work trial for up to 15 days. During the trial, the potential employee remains on benefits, and there is no need to put them onto the payroll until a job offer is made at the end of the trial. This scheme has already been taken up and been successful for some employers and 32% of respondents see it as a practical proposition for their businesses. A further 34% would like the trial period to be longer, but 34% do not see it as appropriate for them.



    Recent reports suggest that larger businesses in the UK have increased the average payment time to 80.6 days. This is an increase from 80.3 a year ago. It is suggested that even small and medium sized companies are taking around 60 days to pay. These payment times have lengthened considerably over the last seven years, since the introduction of the Late Payment of Commercial Debts Act (1998) which was designed to deter such behaviour.

    60% of respondents say that that late payment is a significant or reasonably significant issue for their business, compared to 52% a year ago, while 26% say that it is not an issue at all, or is of little importance to them, compared to 29% last year.



    For 64% of respondents to the Survey, the bank is the preferred source for any additional finance required for their business. Although 10% would look to family and friends, and 10% would seek a business angel, only 4% would consider issuing shares and also only 4% would try to bring in bringing in venture capital.



    In February, parliament voted to impose a complete ban on smoking in public places. This is expected to be implemented by summer 2007. Workplaces will qualify as public spaces although many have already imposed restrictions.

    The survey results showed that although 28% of respondents either already monitor their employees' cigarette breaks, or see the need to do so, 72% don't foresee the need for any monitoring. This compares with nearly two years ago, when a similar question revealed that 52% thought they would need to monitor cigarette breaks.



    Last month, the DTI's Small Business Service launched its Enterprising Britain competition, the government's annual search for the town, city, place or area that best encourages enterprise. The competition criteria state that candidate towns/cities/places/areas must demonstrate how they have supported and promoted enterprise over the last three years and encouraged an entrepreneurial spirit within the community. In 2005, the winner was Sherwood Energy Village in Nottinghamshire. Respondents were split nearly 1/3 : 2/3 as to whether their own area would be strongly placed in the competition.



    The government is keen to make homes and businesses more responsible for the reduction of waste and, is considering increasing the number of incinerators to create 'energy from waste'. 38% of respondents thought that the best option is to increase recycling facilities, while 26% would like cheaper access to recycling and/or incineration facilities and 23% say stricter rules on packaging is the top priority.

    This question raised the greatest number of individual comments this month, including that all the listed response options should be taken, and that taxation should be used to deter waste (by supermarkets). Excessive packaging, junk mail and inbuilt obsolescence were raised as prime causes of waste creation. One respondent described the difficulty he has experienced in trying to introduce a new technological solution for energy generation from waste.



    Listed below are extracts from feedback received in Survey BB93 February 2006.

    Comments are listed under sector headings.

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

    Production & Manufacturing

    The number of QUANGOS and regional development initiatives that appear almost daily is mind numbing. Each of them has full complements of salaried staff, no doubt with final salary pension schemes and as far as my company is concerned I have seen not one scrap of evidence that they make a difference! The only gain we have directly benefited from is the R&D; tax credit (thank you Gordon). However, the rules and complexities ensure that I have no idea how anyone can assess whether or not this rebate makes any difference either. We were doing the R&D; anyway - because we have to in order to stay in business.

    We produce three kinds of waste. Metal scrap, that is already recycled but the government seems intent on making it more difficult; household waste that should be incinerated and 'hazardous' waste e.g. batteries or fluorescent tubes. Surely this 'hazardous waste' is such concentrated sources of metals and chemicals that somebody should recycle them better than is happening

    Business Services

    The ultimate way to control waste is through the price mechanism. Supermarkets should be taxed on their waste and the consumer should also be made to pay more for non-essential packaging.

    Payment terms - we only do business on 30 days and will refuse business from any company which demands a longer period. Recently a large US owned company demanded 90 days and we negotiate 30 days. 80 days is a scandal and hurts small businesses disproportionately.

    Most of our waste is generated by suppliers' excessive packaging, badly targeted unwanted mailings and being forced to upgrade or replace ITC equipment.

    There is a general air of concern reported by many businesses that confidence in the economy is at a low ebb.

    The last question (Q 12)**: There is technology to turn waste in to energy (we have/sell this) but due to legislation in the UK it can not be brought on line. Also there is no political will at local authority level to use this.

    The government is keen to make homes and businesses more responsible for the reduction of waste and, is considering increasing the number of incinerators to create 'energy from waste'. 38% of respondents thought that the best option is to increase recycling facilities, while 26% would like cheaper access to recycling and/or incineration facilities and 23% say stricter rules on packaging is the top priority.

    This question raised the greatest number of individual comments this month, including that all the listed response options should be taken, and that taxation should be used to deter waste (by supermarkets). Excessive packaging, junk mail and inbuilt obsolescence were raised as prime causes of waste creation. One respondent described the difficulty he has experienced in trying to introduce a new technological solution for energy generation from waste.

    Q 12 all answers !1 2 3 4 have a part to play **[Q12. Government is keen to make homes and businesses more responsible for the reduction of waste and, is considering increasing the number of incinerators to create 'energy from waste'. In terms of the waste accumulated and generated by your business, what do you think would be the best way forward? cheaper access to recycling/incineration facilities, increased recycling facilities, increased incineration facilities. Stricter rules on packaging, ]

    Other

    q9 is a good question but the answers could be clearer. One option was "Share Issue", but several other options would also be share issues. [Q9. If seeking substantial additional finance for your business, which of the following sources would be your preferred choice? bank, business angel, family/friends, private investor, share issue, venture capitalist. not applicable ]

    re Q12**. Our business is in manufacturing cardboard products and the regulation to control waste output and recycling is very thorough. This is for good reason, but its implementation is complex.