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CSR: Review responsible for business pessimism

Nia Williams

October 20, 2010

This is according to new research from the Forum of Private Business.

In all, 17% of businesses questioned in October’s Economy Watch member panel survey are ‘pessimistic’ or ‘very pessimistic’, compared to July when 10% reported the same.

However, the number reporting they are ‘confident’ or ‘very confident’ has increased to from 35% to 40% in the same period. Some small businesses surveyed by the not-for-profit small business support and lobby group blame negativity within industry and the media for the increase in pessimism.

Most businesses are positive about the coalition government’s handling of the economy, with 42% deeming it to be ‘good’, 28% ‘fair’ and 7% ‘excellent’. However, 8% think it is ‘poor’ and 15% want to reserve judgement until after the Comprehensive Spending Review (CSR).

“There will be pain as a result of the pending cuts – including for small businesses working in the public sector – but sometimes it’s true that the only thing to fear is fear itself,” said the Forum’s chief executive Phil Orford. “It is important to be positive and not just stoke the fires of pessimism. As some of our members are clearly aware, there will also be opportunities for private enterprise to step in to deliver excellent, efficient services and provide real value.”

He added: “But small businesses must be given the freedom and confidence to become the catalyst for private sector led recovery, and constraints on their growth should be removed.

“Measures supporting enterprise must be protected and improved. We also need a series of bold policies on tax, red tape, procurement and public sector payment as well as employment and training that embody the principles of ‘smaller, better, simpler’.”

Just under a third (31%) of respondents said the tax burden has increased. Not a single business said it has improved. Further, 44% said the cost of doing business has increased and just 2% that it has eased.

While almost a quarter of panel members (24%) have seen orders fall, 39% said they have increased and remainder report no change. Turnover is down for 25% of respondents and has increased for 41%. Profitability has fallen for 30% and increased for 32% of panel members.

While investment in machinery and equipment is balanced, with 17% reporting an increase and 19% a decrease, and the same true of investment in staff training (17% and 175 respectively), more businesses are spending on sales and marketing – in all 29% are increasing investment compared to the 8% that have cut spending.

Anticipated investment includes sales and marketing (45%), product and process development (36%), training (25%), machinery and equipment (21%) and upgrading property (13%). Almost a third (29%) expect to make no investment in their businesses.

Instances of late payment have increased for 30% of respondents and fallen for just 7% – with some members stating that this is because they are now carrying out additional work and so sending out more invoices that are not being paid. Other ‘cash flow difficulties’ are on the rise for 20% and have fallen for 10%.

Overall, 13% of respondents have concerns with both suppliers and customers, 17% with suppliers and 19% with customers alone. A total of 45% have no supply chain concerns.

Access to finance has deteriorated for one in five businesses surveyed (21%) and improved for just 4%. The cost of finance has largely stayed the same, with 70% believing it to be ‘affordable’ or ‘very affordable’.

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