Customers who subscribe to Virgin Media’s new 50 megabits per second service will have to pay a minimum of £46 per month for the deal, making it around twice as expensive as its nearest rival, Be Broadband.

Ian Watt, an analyst with Enders Analysis, believes consumers might be put off from upgrading to the highest speed services because of the cost involved.

“The high first-year cost of the Virgin Media service has to be pointed out,” he said. “It will cost customers £80 just to install it.

“Generally speaking, there is also a confusion in some people’s minds between the technical need for something and a genuine willingness to pay extra for it.”

Enders Analysis says that customers should expect to achieve around 75 per cent of the advertised 50 megabits per second speed of Virgin Media’s new broadband package, which will be available to more than 12 million UK homes by the middle of next year.

The research revealed that the credit crunch has forced approximately 470, 000 small and medium sized businesses (SME’s) into a position where they can no longer afford to operate.

The research illustrates the difficulties for small businesses in coping with the economic climate, showing that 81% of employers have experienced rising costs from suppliers, 56% of which have had to pass these costs on to consumers.

Mark Skinner, Small Business Director at RSA, said: "SMEs are the backbone of the UK economy and are facing tremendous pressures in these uncertain economic times.

"Increasing costs, a decline in consumer confidence and a lack of credit all add to the difficulties SMEs are facing. It is only natural they should look to reduce costs where possible. But they should not cut corners by doing without insurance.

"It is at times like these that businesses are most at risk though, with increased instances of recessionary related events such as theft and criminal damage."

Rent of premises is also on the rise, with 11% of businesses saying this has had a significant impact on business.  Further cost increases included fuel prices, with 30% citing this as significantly impacting business.

The research showed that small businesses in Greater London are not feeling the crunch quite as badly as those further afield. This is likely due the fact that those living in the capital are already used to paying more for their premises. Only 47% of small business owners in Greater London have been impacted by increased fuel prices, compared with 95% of those in the West Midlands.

Mark Skinner adds, "Small Business owners can talk to their insurance brokers for advice on cover options and risk improvements that can help save them money. They can also look at monthly premium payment options to help spread the cost of insurance. RSA offers Small Business owners a range of risk improvement and premium finance options through brokers."

If your small business is feeling the effects of the crunch, you may find some of the articles on our advice page useful. In particular, see Cutting carbon, cutting costs: simple ways to save your business energy, Surviving the credit crunch: top tips for small businesses, and Savings for business; cheap phone, broadband, and uttilties.
 

The poll revealed that a majority of respondents (80%) had seen an increase in operating costs in the last year, and 40% had seen decrease in trade.

In response to questions about the cost of finance, such as loans and overdrafts, 40 per cent said they had seen increases in these facilities from the clearing banks. Most would like to see a reduction in interest rates from the bank.

Just over half of all respondents had seen an increase in their payment times from invoicing to full payment, reflecting concerns from the FSB that large companies are improving cash flow at the cost of their smaller suppliers.

FSB National Chairman John Wright said:

“These startling figures show that the credit crunch is trickling through to the small business sector. In these tough times it is proving increasingly harder for small businesses to rely on their savings and that is why it is so important for banks to be more willing to lend money and for larger firms to settle invoices on time.

“Small business survival is integral to the wellbeing of the British economy. That is why a cut in interest rates by the Bank of England is crucial. The Bank must set aside worries about inflation and look to giving the economy a vital boost.”

If your small business is feeling the effect of the credit crunch, see our latest business advice article: Savings for business; cheap phone, broadband and utilities for some simple ways to cut costs.

Related articles:
Cutting carbon, cutting costs: simple ways to save your business energy.
Beat the credit crunch: survival tips for small businesses
XLN tips for reducing your phone bill
 

The effect of the credit crunch has been significant, with 56% of businesses reporting that it had worsened over the last year. Almost a third of all respondents are owed between £1,001 and £5,000, which they say is having an effect on their cashflow.

Nick Palin, Finance and Administration Director for the FPB, said: “Late payment is on the rise, according to our research, with more than half of respondents saying it has become more of a problem over the last 12 months.

“The government should be doing more, both by paying on time itself and by implementing measures to tackle the problem without increasing the burden of legislation faced by small firms.”

He added: “The research shows that worrying trends are emerging. Supplier abuse appears to be widespread, and many smaller firms are in a catch-22 situation, fearing that, if they take action and use the legislation to charge interest, these larger companies will simply refuse to deal with them again.”

The FPB says it is working with the government to find non-legislative solutions to the problem.

If your small business is struggling in the current economic climate, try to find ways to cut back on expenses. For example, bundling you phone and broadband package can bring you significant savings on both services. Read more about how you can save on phone calls and broadband in our guide to choosing a phone line provider

The statistics show that in 2008, 65 per cent of households in Great Britain (almost 16.5 million) had access to the internet, almost 1 million more households than at the same time in 2007, and 5 million more households than 2002.

Of the UK including Northern Ireland, 65 per cent of households had access to the internet, showing an increase of 8 per cent since 2007. The region with the highest level of access was South East, with 74 per cent, whereas households in the North East had the lowest level of access with just 54 per cent.

The statistics indicate that the number of broadband connections is also on the rise. Of those households with internet connections, 56 per cent are connected via broadband, compared with 51 per cent in 2007.

The report found that age and education also factored into the statistics, with 93 per cent of adults under the age of 70 who had a degree or equivalent having access. Individuals who had no formal qualifications were less likely to have internet access, at just 56 per cent.

The study found that since the beginning of the year, 16% of businesses with a turnover of more than £1m had taken out loans of £500,000 or more, an increase of 3% on the same period last year.

In addition the study revealed that 17% of businesses sampled had increased their loans over the past year, with a further 14% claiming they intended to do so.

Richard Roberts, SME market analysis director for Barclays Commercial Bank, said: “Overall, we have seen a slight increase in loan applications in recent months, in contrast to the trend in 2006/7, while application success rates for established SME customers remain at over 90%.

“The findings of the study indicate that established SMEs are borrowing to capitalise on business growth opportunities and are receiving the support from lenders to do so.

“These figures go against any suggestions that UK SMEs are experiencing limited growth potential and indicates confidence despite current market conditions. Many UK enterprises are in a relatively strong position to borrow.”

The FSB has revealed that small firms are taking increasing legal action against larger firms, in order to claim late payments.

Research by the Federation of Small Businesses shows that small firms are waiting up to 105 days to receive payments from larger companies.

Although the small firms are able to enforce payments under the Late Payment of Commercial Debts (Interest) Act, some are reluctant fearing relationships with the larger firms could be damaged.

Waiting significant lengths of time for payments is having a damaging effect of small firms’ cashflow. However, according to Susan Bateson, debt recovery manager at Stephensons solicitors, small firms are becoming more assertive.

“We are seeing a fightback by businesses who simply cannot afford to wait any longer for their cash. There is not much to gain from doing business when profit is eaten away by late payment."

She continued: "In our experience, sending a ‘letter before action’, which gives the debtor seven days to pay before legal action is taken, prompts the majority of late payers to part with their cash.”

"The impact of the credit crunch is being felt by all, and it’s even more chronic for small firms, who need their cash flow to run smoothly in order to survive in this tougher climate.”

"Large companies have a moral duty to their smaller counterparts to behave responsibly."

Related article: Beat the credit crunch: survival tips for small businesses
Related link: Federation of Small Businesses

Small businesses, who are viewed as risky investments by banks even in boom times, will now find it harder than ever to secure loans. If they do, they will come with increased interest rates.

There are a number of ways in which small businesses can prepare for a financial downtime, with a focus on cashflow being a central issue. Here are some simple steps you can take to help whether the storm:

Make cashflow forecasts

If things are likely to get tough in the near future, it’s important that you prepare for them. One of the most important things you can do when preparing for a credit crunch is to create a realistic forecast of future cashflow.  Run some scenarios, such as a drop in revenue or loss of customers, and evaluate how well your business would cope in this situation.

Visit Figurewizard to create a cashflow forecast online.

Review your current bank

Your bank will play a key role in your credit crunch survival, so it’s important to know you’re getting the best deal for your business. Keep an eye on your current bank in the press and be on the lookout for any changes that may affect lending. If you are considering switching accounts to a new bank, thoroughly investigate your options. Compare the various deals, and be sure to pay attention to the fine print – watch for hidden charges and any clauses which may affect your interest rate.

You can compare different account options online by at MoneySupermarket

Look for ways to cut expenses

Trimming the fat from expenses can go a long way in saving company cash. Think carefully about any purchase you make. Do you really need to buy top-of-the-line laptop, or would something cheaper serve the same purpose? Travel expenses, whether its taxis to a meetings or flights to conferences, can quickly add-up. Consider whether there are any viable alternatives. If a meeting could occur via telephone or video-conference instead, this would cut out the money (and time) spent on travel.

Get tough on accounts owing

While you may take a more relaxed approach during boom times, during a recession it is important to ensure clients accounts are paid on time. Larger clients will be adopting their own strategies to retain funds during these times, and so may be paying even later than usual. Don’t be afraid to get tough, a good client will understand that you’ve got a business to run too, and that receiving payments is an essential part of maintaining a steady cashflow.

Try to reduce your monthly costs

No matter how tightly you budget your finance, there will always be unavoidable costs that will occur for every business, such as rent and bills. Though expenses of this nature can not be cut out entirely, you may be able to save on them. Use price comparison sites, even for small items such as stationary, as over time these costs will add up. Phone & broadband bills can be costly, so look for a package which allows you to bundle these services. If your business calls abroad often, make sure your provider offers cheap international calls. Could you move to cheaper premises to reduce rent? Try to avoid signing up to long-term contracts, as you may want to get out of them if times get tough.

Try to keep staff costs down

Paying employees is an unavoidable cost in most businesses, but some careful consideration of how this money is spent can go a long way. If you are thinking of recruiting new staff members, evaluate whether existing staff could fill this gap through paid overtime. If new staff must be employed, ensure this recruitment is effective. Avoid costly recruitment processes, and take time to the right person for the job. Recruiting can be an expensive procedure, so it’s important to get it right the first time.

For more in-depth information on surviving the credit-crunch, visit businesslink

Related Links:
XLN Telecom – Cheap phone & broadband deals
Pricerunner – Price comparison site
EuroOffice – Cheap stationary supplies