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In such troubled financial times, many business owners are taking a step back and evaluating their surrounds to ensure they are able to stay afloat through such rough times. In this case, owners are making an evaluation on the business atmosphere they are in. They may ask the questions, ‘Is this atmosphere right for the future of my small business?’ or ‘Can my small business be successful in this kind of environment?’ Although asking these questions are easy – answering them accurately can be much more difficult.

The United Kingdom was hit hard by the fall of the economy, mainly due to the fact that much of the industry in the UK was run by the banks – much like it was elsewhere around the globe. Banks controlled the loans and, hence, controlled the success and failures of small businesses accordingly. However, due to this recent economic downturn, banks are no longer providing such loans to small businesses which makes it a bit more difficult to compete with larger scale companies. Banks just can no longer afford the risk – or, based on credit, have limitations in place that doesn’t allow lending to smaller businesses. This kind of ‘closed door attitude’ brings about another question, - Is the UK business atmosphere right for small businesses?

Facets of the UK Business Atmosphere:

Asking the above question is the first step. The second step is finding relevant answers to it. Consider the following attributes:

  • Interest Rates: The official bank rate in the UK, independently set by the Bank of England, was 0.5% as of May 2011. Although this is relatively high, it is not so high to scare off small businesses.
  • Inflation: The British Government has an inflation target of a 2% annual increase to the Consumer Price Index (CPI). The CPI is based on the internationally comparable ‘Harmonised Index of Consumer Prices’. In early 2011, the CPI was around 4.5 percent. What is important to note here, in relevance to the UK business atmosphere for small businesses, is that such numbers are dependent on the rest of Europe. Therefore, small business owners should consider the whole picture and not just focus on the facets of the UK’s struggles.
  • Investment: The UK has a very strong track record in attracting foreign investment. Even in the economic downturn, the UK attracted more than 1.2 trillion US dollars in 2010. This is very encouraging for small business owners.

Although these statistics may seem quite relevant to the current state of many local businesses, this does not necessarily mean that business is over. It simply means that the time has come to truly evaluate where you business stands in the industry and how you can strive to stay ahead of the competition.

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