Small Business News | Surviving Public Sector Cuts

Real Business has recently published an article outlining how small and medium enterprises (SMEs) who supply to the public sector are able to protect themselves against the ever increasing public sector cuts.

Across the public sector, the government spends around £140bn on goods and £80bn on services annually. Although active discussions on price cuts are only being held with its 20 largest suppliers, it seems likely that this is to spread to the majority of suppliers including enterprising businesses and SMEs. Francis Maude, the Cabinet Office minister, has already been reported as saying that he expects public sector suppliers to cut their prices in order to help lower the public deficit.

However warnings are being made to smaller suppliers about ‘knee-jerk’ price cuts as there are concerns that it could be rather harmful to their overall profits. Suggestions have been made on how to come to a compromise over this situation. One such being to develop total cost of ownership tools to help evaluate the lifetime cost of the contract to the government, offering longer term contracts in exchange for lower annual costs.

To see all the survival tips and full article please visit the Real Business website.

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