Small Businesses Fight Against The Recession

There was some good news in the world of leisure and hospitality recently and it came from the quarterly review carried out by London based, accountancy firm PricewaterhouseCoopers. PwC confirmed that the number of companies within the sector going bankrupt fell by 15% in comparison to the same period last year.

Despite this sign of positivity, the leisure and hospitality division remains the worst hit as a result of the double dip recession. Reasons for this are obvious to the casual observer; as the general public are tightening their belts the first thing on the budget to scratch out are leisure activities such as visiting restaurants, going to pubs and staying in hotels.

In the past 12 months 1,464 businesses within the leisure and hospitality sphere have had to call it a day, this is up 12% on last year’s figure which was only 1,304. The quarter covering June, July and August in 2012 on the other hand, showed a distinct fall of insolvencies with numbers dropping from 336 last year to 299 this year.

Within the sector itself, the worst hit specific business type has definitely restaurants and eateries. There were 156 files for bankruptcy in the 3^rd quarter of 2012 alone.

Someone who deals with this sort of thing all the time is David Chubb who works at PwC as a business recovery partner. He explained that, “Pubs and restaurants have had a good quarter in the fight against the recession. They continue to combat drops in discretionary spend by enticing consumers with promotions like set menu vouchers, happy hours, and multi-buy deals”.

He did also mention though, that these benefits may be of an ephemeral nature, “There are signs that consumers are now expecting this and are farming the offers without spending on additional courses or drinks which the promotion was priced to entice.”

Sectors that outdid the hospitality sector last quarter in terms of insolvencies were retail, with 346, construction, with 631 and manufacturing with 392.

Business finance experts makeitcheaper.com conducted research into the hospitality sector and their findings concluded that 41% of business owners have been forced to dip into their own savings and finances to keep their businesses afloat.

So although the recent incline of businesses within the sector going into liquidation might show positivity and perhaps even a streak of resilience, there are still underlying problems to be tackled.

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