When florist Diana Roberts moved into her new double-fronted shop on Darkes Lane in north London six months ago, she felt things were on the up. She’d had to move out of her previous shop in Cheshunt, Hertfordshire, because competition from supermarkets had left her with too little business to cover the rent; this was a fresh start in a more prosperous area and her hopes were high. But then the credit crunch came and things didn’t look so rosy.

“As soon as people knew about the financial crisis they stopped spending money,” she said. “There’s a lot of wealth round here, but people seem scared to buy luxuries. Maybe because they’re that bit better off they’ve got their money tied up in shares and big mortgages so they’re anxious about what might happen.

“It’s making it very difficult to manage, if I don’t take £300 a day I can’t survive and some days lately I’ve been taking no more than £30 or £40.”

Roberts is feeling the pinch at the funding end of her business, too. When she moved premises she asked for her overdraft to be extended by £1,000 to cover her while she established herself but was refused.

“I’ve banked with Barclays for 15 years and I don’t have any debts except a small overdraft,” squeezed from all sides now,”she said. “When I went to ask

said the FSB’s Stephen Alambritis. “We call it the stuck economy; no-one’s moving, no-one’s trading, there are no new goods coming in and there’s nothing going out. Small businesses have taken every measure they can now; all that’s left to keep them going is to cut staff.”for an extension they told me about all these services I could pay for to make them money, but they wouldn’t extend my overdraft to keep me afloat while I settled in.”

A snap poll sent to the Bank of England by the Federation of Small Businesses last week proved that Roberts was not struggling alone. Over 80% of respondents said costs had increased in the past year, 46% had experienced a decrease in trade and 40% had seen rises in the cost of loans and overdrafts.So how does it feel for the 13.5m people whose livelihoods depend on the success of small firms? John Hole runs a tiling company in Hereford that has four staff members, all of whom are anxious about their jobs. His running costs are up so much money. But right upthough, the unthinkable hasby 20 %, his usually steady flow

until the last minute we were being told that everything was definitely going to be okay.”already happened. Wine merchant Simon Monroe lost his job when the wine importer he worked for went bust 10 months ago.

The company’s entire staff of 16 found themselves out of work and out of pocket just two weeks beforeof customers has reduced to a trickle and his bank has just increased the cost of his overdraft. “We’re all incredibly worried about how we’ll manage,” he said.

“I’ve been trading for 32 years and we’ve survived recessions and negative equity, but I don’t think I’ve ever known anything as difficult as this. Our profit margin is well down; we’re just treading water, I don’t know how much longer we can last like this and I can’t bear to think even a couple of months ahead.”By the time he realised it wasn’t, it was too late to try to jump ship, but he registered with an employment agency and was offered a job with a larger company early this year.Christmas.

“Not working for a very“We’d known for a while small firm certainly figured in my choice of a new job,” he said. “There are plenty of small businesses that can survive in difficult times if they’re run well, but I suppose after my experiences I wanted to steerthat things were getting difficult,” he said. “It had always been pretty hand-to-mouth and we’d had a few days when the warehouse holding our stock wouldn’t release anything because they were owed well clear of them for a while.”

So are anxieties like these, on top of the threat of jobs cuts, making it harder for small companies to recruit?

Louise Whitehead, co-found-er and Director of SME recruitment consultant Igloo RPO, said she had noticed some changes.

“None of our clients has stopped hiring altogether but they are all proceeding with more caution,” she said. “There are other signs of trouble, too; some clients have asked for extended payment terms, so we’re offering flexible payment packages for hiring projects.”

But despite the scare-stories, there are plenty of people still keen to work for smaller firms.

“With a smaller company they will know their boss and have a clearer grasp of how a company is doing, which is obviously an advantage in times like these,” she said.

But Igloo RPO deals mostly with technology companies, and Marc Barber, editor of smallbusiness.co.uk, which provides advice and resources for small companies, is less confident about the security of jobs in small businesses that are reliant on trade from the general public.

“Consumer-facing small businesses are unpredictable at the moment,” he said. “It’s hard to say whether they’re a secure place to work and it’s so hard to predict which sectors are going to be hit next. A job in m a n u f a c t u r i n g u s e d to guarantee you employment no matter what, and then, almost overnight, the industry lost its footing.”

But the FSB’s Alambritis doesn’t believe these problems should or will lead employees to seek jobs with larger organisations.

“Bosses of small businesses tend to have a good relationship with their staff, so they’re usually better at keeping people informed and can offer reassurance,” he said.

“Some staff may even be willing to accept pay or job cuts on the promise of a job being open for them when things improve. It’s not ideal, but the impact of this financial crisis is being felt in companies of all sizes and at times like these people hold on tight to the job they’ve got.”

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