Phil MeekinView Profile
The recent period of heavy snow may be “the straw that breaks the camel’s back” for some businesses. Ones already vulnerable from the impact of the recession. It could be the factor that decides whether or not they continue to trade.
Recently, Marks & Spencer said heavy snow falls throughout the U.K. over the past two weeks had cost it “millions of pounds” in lost sales. Some economists have forecast the overall impact on the economy to be negligible. Although, the short-term impact on businesses whose cash flow is stretched to the limit could be catastrophic. The two weeks after Christmas are the year’s most important shopping period for retailers.
It had already been anticipated that there may be corporate casualties in early 2010 in sectors such as retailing. Those predictions were made before snow was even anticipated. In the past, short term cash flow shortages caused by unforeseen events like freak weather conditions were covered by temporary bank borrowing. However, with a dearth of the availability of credit facilities other than to the financially strongest companies, some could simply run out of cash. As an alternative business owners are seeking professional advice on how to survive and buy time with creditors.
It is not just retailers who are suffering, farmers are seeing crops ruined as they struggle to harvest. While haulage contractors are grinding to a halt – impacting both on their own businesses and those they service.
Whilst many businesses will recover sales as the weather improves, others such as pubs and restaurants, which often depend on spontaneous discretionary expenditure by the public, never recoup the lost sales. Such businesses are amongst the hardest hit by the economic downturn so far.