O2 Business reveals sales 'rollercoaster' for small businesses

  • Volatility of retail sales amongst small businesses at its highest level since 1990 according to a new report commissioned by O2 Business and the Centre for Economic Business Research (Cebr)
  • Research reveals a 36% swing in average sales between the best and worst months
  • O2 Business is launching Business Essentials, the first flexible tariff for small businesses designed to give them the ability to adapt and respond to their changing business needs

Small businesses across the UK are experiencing their most volatile retail sales year for over a decade, according to a new report released today by O2 Business and the Centre for Economic Business Research (Cebr). The report, issued to mark the launch of Business Essentials, the first flexible business tariff on the market designed to give customers the ability to adapt and respond to their changing business needs, reveals that today’s climate amongst small businesses is at its most unpredictable since 1990. In 2014 alone, small retailers saw a 36% difference between average sales in the best (December) and worst (February) months, with this variability expected to further increase in 2015.

To address the challenges facing small business owners as outlined in the report, O2 Business is today launching a new tariff which transforms the way small businesses pay for devices, airtime and business applications. Business Essentials is the first flexible business tariff on the market; whether it’s the need for the latest device, a tailored data plan or new business apps, the scalable tariff makes it even easier for business owners to put digital technology at the heart of what they do.

Annual swings in household expenditure are a key driver of this sales volatility, the study found. Consumption has risen to its highest level since before the financial crisis, and its variability is expected to increase even more as spending on ‘discretionary’ items such as clothes, recreation, and durable goods picks up.

This unpredictability reaches beyond the retail sector too, with the production and manufacturing industries seeing around 17% variation in sales throughout the year, although unlike retailers, who enjoy a Christmas spike in sales, December is their quietest month.

As part of the report 530 decision makers in small businesses across Britain were surveyed* about what impact these swings in performance throughout the year can have, such as shifts in demand and consumer confidence. Over a third (34%) of small businesses admitted that they were unable to meet demand at peak times. The reasons cited by these businesses for their inability to meet demand were varied; 43% reported having insufficient physical capacity, 29% said that the peaks in demand was unexpected, and 12% identified key staff members leaving the company as the reason.

Across all industries small businesses are particularly vulnerable to shifts in demand and consumer confidence as well as economic downturns, but the study shows that it’s not just the economy that can determine a business’s success. Over a third (39%) of companies reported negative impacts on their business caused by unexpected events; such as disruptive weather (12%) and changes to Government policy (13%) as well as sudden illness of employees (9.6%).

The evidence from the study suggests that to successfully manage both the expected and unexpected variations in the business cycle, small business costs need to remain as flexible as possible. Unnecessary fixed or inflexible business costs can hamper the performance of small companies and hinder their ability to adapt to peaks and troughs in activity throughout the year.

Ben Dowd, O2’s Business Director, said “Running a small business is always highly unpredictable and the findings from our research show that this continues to be the case. Sales volatility and unexpected changes in the market place present both opportunities and challenges. At O2 we recognise this which is why we’ve launched Business Essentials, a unique business tariff that is every bit as flexible and adaptable as our customers business’ needs to be. With Business Essentials we’re putting customers in the driving seat and making it even easier for them to put digital technology at the heart of what they do.”

Colm Sheehy, Senior Economist at the CEBR said “Now more than ever, small business owners face a plethora of tough challenges: from sudden changes in spending patterns, to unpredictable weather and staff turnover. The economic recovery has boosted customer confidence, but small businesses need to ensure they are agile enough to adjust to the resulting sharp peaks and troughs in spending.”

This industry first offers unlimited calls and texts on most tariffs – business owners simply decide how much data they need for each employee from one month to the next. They can then choose to pay for their devices upfront to reduce monthly spend, or spread the cost with a 0% APR Representative loan over 24 months.

Customers will benefit from clear pricing, up to ten of the latest devices on a single contract and a simple 24-month price plan, with the option to change devices**, digital apps and airtime at any time

For more information visit: o2.co.uk/business-essentials

For advice and business support from O2 Business, visit: http://businessblog.o2.co.uk/

*Customers can upgrade at any time subject to paying of the outstanding balance of their loan. If a customer has multiple devices on a single credit agreement, additional terms and conditions apply.