The recession "Round 2"
 

Just had a letter from Ernst & Young stating that some of our customers have gone into compulsory liquidation:

Swallow Hotels
London & Edinburgh Inns
Newlord Limited
The Gourmet Pub Company
Winlease Limited
React Inns Limited
London & Edinburgh Swallow Group Limited

Not good news for them.

This is just the start too. There will surely be quite a shrinking of the service sector in the years to come.

Maybe if they charged a fairer price they'd do better. I always thought we were still in round 1 anyway

Round 2 has been about for a few months now for those businesses who noticed the recession first in late 2007, and survived, and then saw improved trading from mid 2009 to early 2010.

Problem now with Round 2 is that a lot of these businesses no longer have the "fat reserves" to see them through this second wave.

I have lost count now, the number of clients who have rung me in the last 2 months to say they are struggling or the banks wont renew overdraft facilities, etc.

I'm amazed Jessops have survived so far.

Firm I work for came through the first part (2008-9 recession) ok. A lot of smaller customers of ours went under, but we took on some big customers which made up for it. We've taken a hit recently tho and are well off targets, and it doesn't look like there will be any big wins to make up for things this time..

The weird thing at the moment is everything is still running off bail-out money, so things look quite good on the surface.

IMO it'll take a little while for the spending cuts and public sector job cuts to sink through.

What industry are you in as I deal with a lot of hotels as well.

Sadly I believe we have another two years left of the recession, belts tightening all over. We have a small family business and I cant see many if any surviving this.

We sell exercise & fitness equipment - 11 employees including family!

Ah ok cool, we produce leather goods, room folders, menu covers etc for most of the 5 star properties.

Not sure about you but working with family is far too much of an effort at times!

The folks have been doing it for 20+ years - we're well practised in separating work from home.

History says that most business failures actually happen in an upturn, rather than through the depths of the recession, as businesses over-trade, being unable to access the working capital required to pick up again.

That said, these businesses feel like genuine liquidations - i.e. the weak falling out of the market - and it certainly doesn't feel like there's an upturn in sight yet!

Gordo

The Estate Agents on the South Coast have started ringing me again.

I was looking for another home, retirement home, on the South Coast during the last downturn .... I didn't have to sell, so the falling market was an opportunity for me.

The falls were nothing really, not many properties for sale and sellers holding out. The prices recovered and the Estate Agents (who had been ringing me daily) stop calling. Until the last 3 weeks where their interest in me as a buyer not a seller and with finance secured has racked up remarkably ...... clearly they are trailing through their previous contacts as buyers have disappeared.

This next year will see houses lose the 35% in value which I fully expected last time around, properties are flooding to the market and buyers have left. That can only mean one thing - BIG price falls.

I noticed our wash figures dropping as soon as the credit crunch stuff hit the media, but it appears to be picking up slowly now, at the end of last year we were 40% down :eek:

Last month we were only 16% down. month before that 24%

So the graphs show us moving upwards, we are understaffed now though, i just work all the extra hours up myself, i would kill for a 3 day holiday :mad:

The growth of the economy shows different. I think most of the firms going under are ones still suffering from the start of the recession. Maybe they didn't think it would last as long as I for one certainly didn't and the drop in prices isn't enough to save firms as most people are already cutting down on their spending and leisure groups are bottom of most people's lists for spending?

http://www.bbc.co.uk/news/business-10737352