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April 2009
48
Data
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Data reveals the true impact
of the credit crunch on SMEs
Rolf Hickmann, managing director of PH, takes a look at how data insight can help
small businesses through the credit crunch
H
igh profile business failures are that reports of a possible recession as early are paying their bills. Assessing the B2B
grist to the mill of those as September 2008 were exaggerated. universe using balance-sheet and P&L
predicting a deep recession, and So far, there hasn’t been the spike in SME factors, such as liquidity and gearing,
B2B marketers could be failure rates seen in the 1991 recession. reveals that there has only been on average
forgiven for thinking that it’s The raw data shows an increase in the a very gentle decline in the financial
simply too risky to go looking for new number of business failures. However, if strength of the business population since
customers. But while credit is tight and you look at the business failure rate – that’s late 2006. But this decline is well within
fewer businesses are starting up, data from the number of businesses failing as a normal historical variations, right up to
the B2B universe puts forward a different percentage of the overall business January 2009.
story of the impact of the recession on the population, which has likewise been Similarly, looking at payment
UK’s SME population. increasing in recent years – then a different performance data of businesses shows that
picture emerges. the ‘days beyond terms’ (the length of time
Risky perceptions a business takes to pay its bill after the
Many B2B marketers have already shifted agreed terms) has been rising, but only
their focus from customer acquisition to gradually, since the end of 2007, and it’s
customer management in recent months, larger businesses that are hoarding cash.
believing it’s easier and, of course, less risky
to stick to the customers they know will pay Using data to appeal to customers
their bills and are more likely to remain So what’s all this got to do with B2B
solvent and in business. Sticking to what you marketing? Well, what this evidence points
know is a sensible approach, but at the same to is that the recession is still not written
time you are in danger of missing out on in stone.
opportunities from many of the sound The SME population, the backbone of the
businesses in the economy that could have a economy, is not yet in a terminal state and
need for your products and services.
“There’s a danger that
if the gloom psychology could be reversed
According to Experian’s March 09 quickly and support provided in terms of
‘Insight Report’, there’s a danger that perception is starting to drive injecting liquidity, we still have a chance to
perception is starting to drive reality and so
reality and so fuelling the
avert a deep and long recession.
fuelling the downturn in the economy – and It also shows there are still many sound
there’s certainly the data to support this downturn in the economy” and effective businesses operating within
argument in the B2B world. the economy, despite the downturn. If
How much have businesses in the UK
Rolf Hickmann, managing director, PH
they’re not your customers already, it’s a
been affected by the current liquidity matter of finding them – while they are still
crisis? And when exactly did the downturn in good supply, even though there are
start to impact small businesses? There In fact, after a measured (but far from fewer of them. If they are your customers,
have been numerous media reports and catastrophic) rise since the end of 2007, it is about making sure you continue to
debates around these questions in recent the default rate was actually down in appeal to them.
months, however, much of the evidence January 2009 from its level in December That’s where data analytics comes in.
relating to SMEs in particular has been 2008, and still lies at only a third of its Drawing in data from the business universe
heavily anecdotal. 1991 level. Not only are we still far from to identify these sound prospects, learn
the 1991 peak in terms of default rate, we what makes them tick and so be able to
SMEs weathering the storm are in fact just barely back up to early 2003 communicate effectively with them. In a
Analysing the financial and insolvency data levels. tough climate, there’s no need to stop
of every business registered at Companies That’s one measure, but this general marketing, but a more robust approach –
House (excluding those firms that are trend is confirmed by looking at other one that puts real data insight at its very
registered, but do not trade and young measures such as the financial solidity of heart – is certainly needed.
firms less than 24 months old) it seems SMEs and the speed at which businesses Rolf.Hickmann@phgroup.com
B2BM APRIL 09 – www.b2bm.biz
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