This should have been the happiest time for 30-year-old Matthew Elwell. His
family’s business, the Anglo Italian Tile Company, recently moved into a
plush new showroom seven miles outside Birmingham. For the first time in the
firm’s 60-year history it had its own premises and a pretty impressive one
at that.
“It’s one of the nicest tile showrooms in the West Midlands,” said Elwell of
the 5,000 sq ft, two-storey showroom that’s decked out with marble, glass
and mosaic imported from Italy.
A party has been scheduled for the end of November to celebrate the move and
some 400 people have been invited, including Sky Sports football pundit Andy
Gray, who lives locally, to cut the ribbon.
For the Elwell family and their staff of 19 this is a dream come true but now
it has been tainted by the credit crunch. Matthew, who runs the tile
business, hates the term.
“I don’t know what it means or where it came from,” he said, “but I know that
whenever I read about the credit crunch in the papers or watch a news
bulletin I think ‘Blimey, I can’t buy myself those two pints or that Indian
takeaway now’.”
Unfortunately for Elwell, many people are feeling the same way about tiles.
“The ordinary man on the street is so hammered by gas and electricity
[bills] that they’re not coming in and buying £100 of tiles,” Elwell said.
His more upmarket customers, however, are still spending and with a mix of
competitive pricing and hard graft Elwell is keeping sales up.
“Yesterday, I followed up 30 leads,” he said, “I’m just calling people that
have been in the shop. This is not something I’ve ever done before. It’s
desperation but it’s got to be done.”
He is confident business will improve in the run-up to Christmas, but others
are not so sure.
Paul Matthew, 32, co-founded The Hide Bar near London Bridge, south London, in
February last year. So far, he said, sales are in line with expectations but
corporate bookings for Christmas are down compared with a year ago.
“There are a lot of estate agents around here and unsurprisingly they haven’t
expressed any interest yet. We’ve also noticed that companies that have
already booked want to spend less - £50 a head rather than £100.”
The Hide Bar has a long cocktail and wine list but punters have been drinking
fewer of the top-end wines and champagnes in the past few months, according
to Matthew. In volume terms, however, they are drinking just as much as ever
- if not more.
One of the bar’s investors is a banker at Lehman Brothers, the investment bank
that went into administration two weeks ago, and for that reason Matthew has
followed the credit crisis more closely than a normal publican.
“The headlines make me feel nervous but we have been sensible. We put off
restoration work this summer but we’re keeping the money in the bank and
waiting to see what happens,” he said.
Stephen Alambritis of the Federation of Small Businesses (FSB) confirmed what
many of these firms are saying.
“These are very difficult times but small businesses seem to be holding their
own,” he said. “They have an equal amount of deposits compared to borrowing
but the danger is that they are beginning to tip into savings and when that
happens they can become in hock to the banks.”
He added that small firms, unlike the rest of the economy, were not yet
shedding jobs but neither were they hiring.
James Farmer, 34, co-founder of the London-based publishing company B2B
Marketing, said that his firm’s recruitment plans had been shelved.
“My business partner and I have been talking about the credit crisis for the
past year, and trying to prepare for it, he said. “We have been reviewing
processes and cutting back. The recruitment drive is on hold, though we’re
not making anyone on our team redundant.”
To keep his nerves calm Farmer said he avoided reading the newspaper headlines
as he felt that nobody really knew what was going on and his chief concern
was “bullet-proofing” the company.
“We have stockpiled some cash and we’re definitely not taking any big
financial gambles because you just don’t know what’s going to happen. Our
buddies in the City don’t even know what’s going to happen,” he said.
Not making Farmer’s credit-crunch journey any smoother is the fact that his
bank manager at the Bank of Scotland, which was taken over by Lloyds two
weeks ago, has been made redundant.
“We’re using the bank’s call centre, which is worrying because if it got
really bad we would not have anyone in the bank to lean on.”
Helen Nikzad, director of Katherine’s Florists in Newcastle, is in a very
different field to her publishing and publican peers but she has adopted a
similar strategy for coping.
“We are monitoring every cost, from electricity to loo rolls. Flowers are a
luxury so we are also looking for better prices from the growers and we are
pricing bouquets more competitively,” she said.
The business was set up by her mother 40 years ago and Nikzad hopes “from the
heart” that the credit crisis does not force her to close any of the four
outlets.
Alambritis at the FSB said that many small businesses “played a clever game
during the nice decade” by saving and not taking on excessive debt.
Unfortunately, their true test is only just beginning as the credit crisis
spills into the real economy.
Banks are adding to the pressure, our Bank is pressuring us to reduce our facility in short time-frame, yet they have significantly lengthened the time they take in paying us on commissions we secure on financial services we sell on their behalf (and are failing to meet their agreed T's&C's)
Richard, Luton, UK