The majority of entrepreneurs admit the credit crunch and subsequent downturn in the economy has had an impact on their business and are taking action as a result, according to a survey of small business owners.
The research, carried out by MacIntyre Hudson, discovered that 55% of entrepreneurs found conditions in their own business more difficult than 12 months ago and 84% thought the wider economic climate was worse now than a year earlier.
As a result, 75% of businesses are now looking to control expenditure more closely, 44% have reduced spending and 30% have laid off staff.
The tough conditions have also had a detrimental impact on business owners' personal lives, with 33% working longer hours and 27% expecting their personal income from the company to decrease in the next 12 months.
And 28% said the downturn would delay their exit from the business or retirement by up to five years.
The research also found that small firms are attempting to minimise the impact of late-payers by imposing tougher credit conditions on customers. Almost half (47%) are doing so for existing customers, with 44% conducting stricter credit assessments for new clients.
"In today's more difficult climate, tight control of cost and a focus on cashflow have become of paramount importance as the sales growth may simply not be there any more," said Laurence Whitehead, corporate finance director at MacIntyre Hudson.
"But while costs must be kept under control, it is important to avoid downsizing in such a panic that the ability to deliver is compromised. Those businesses which can most effectively manage this delicate balancing act will be best placed when the upturn eventually comes."
Businesses with borrowings were most affected by the downturn, the survey found, with 89% reporting a significant deterioration in business conditions and 63% experiencing higher interest rates from banks on borrowing.
These companies are more likely to be actively cutting costs, with 81% imposing stricter expenditure controls and 40% reducing headcount.
