Has The Recession Had a Positive Impact On Company Formation?


The media is saturated with news of redundancy and businesses going into administration. However, recent research suggests that over half of small companies feel that the demands of recession have forced them to become more efficient.

Consumer spend has decreased to record levels as a result of a number of contributing factors, namely the fact that the recession has dealt a resounding blow to consumer confidence . This fact combined with aggressive discounting and increased competition, means that businesses can no longer afford bad customer service or poor products.

Matthew Porter, marketing director of management consultancy firm Calding Consultants comments: “Many companies feel that the recession has provided them with the opportunity to streamline their business, cut costs and improve their brand proposition. Instead of scaling down their business activity, many business owners have chosen to diversify their offering.”

One example of a small business owner, who has used the credit crunch as a platform from which to extend their brand, is fashion designer Mark Collins, he comments: “In pre-recession Britain, there was certain snobbery among high end retailers. This snobbery was facilitated by the fact that they were able to charge high prices – this is no longer the case. While there is still a demand for luxury and designer goods, it has resoundingly diminished. As a consequence, many luxury brands have had to offer a lower cost alternative to their product, to keep their company a float.”