AROUND one in eight smaller firms have considered closing in recent months despite the recovery.

Dorset business leaders say the research shows SMEs are not out of the woods despite good economic indicators.

Insurer Zurich, which surveyed 500 small and medium sized businesses, found one in four had lowered their prices in the past three months and 15 per cent had laid off staff. It said a sizeable number of firms were "teetering on the brink of shutting up shop".

Roger Williams, president of Poole Chamber of Trade and Commerce, inset left, said: “It’s still very tough for small businesses. They have to be competitive and find a way. If funding is the issue, they’ve got to stop looking in traditional places and look elsewhere.

“The business I run is a small business. We struggle, cash flow-wise. We have to be very imaginative. Sometimes people get to the stage where they’ve had enough and they want to move on.”

Ian Girling, chief executive of Dorset Chamber of Commerce and Industry, inset right, said: “There is no doubt that the economy is in recovery and confidence continues to improve.

“However, whilst we saw continued growth in Quarter 2 of this year, there is evidence this has slowed and we need to remember we are coming out of a major global recession – this isn’t going to happen overnight.

“Most sectors are growing but the environment remains challenging, particularly in sectors such as retail and we shouldn’t be complacent. We still face further austerity measures and of course interest rates will at some point start moving.”

Zurich said the number of companies considering closing had remained consistent in recent months and that “serious financial difficulties are still on the agenda for many”.