SMEs report little or no improvement

Nia Williams

April 12, 2010

Despite GDP figures showing a return to positive growth, 63% of SMEs are finding trading conditions tough – 5% more than at the end of 2009 – and 71% have seen little or no improvement in the trading environment compared with a year ago.

As a result, small business owners are more pessimistic about the future than they were at the end of 2009. Almost half (45%) say that it will take their business more than a year to get back to normal again after the recession, compared to just 26% in Q4 2009.

However, some SMEs are optimistic about the shape the recession has left them in. One in ten (11%) say that they are in better shape than they were before the downturn, while two in ten (20%) say that it has left them fighting fit. A more cautious 41% say the recession has left them slightly the worse for wear but nothing they can’t come back from, while 17% say that the damage will take some time to overcome. But for one in ten (10%) the recession has taken a heavy toll leaving their future looking decidedly uncertain.

The findings come from the latest uSwitchforBusiness.com SME Confidence Survey, which tracks small business confidence over time and highlights current issues and concerns facing Britain’s small traders. With recovery now in sight, the biggest challenge facing 43% of businesses is increasing sales and turnover, while getting over the recession is the biggest hurdle for 15% followed by dealing with regulation and red tape – the main challenge for 13% of small businesses this year.

However, small business owners are painfully aware that they are not out of the woods yet. 62% believe that the economy will get worse again before it fully recovers with over a quarter of these (26%) saying that there are already signs of a double dip. Just 18% think that the economy will start to recover fully without another dip.

Commenting, Jake Ridge, small business expert at www.uswitchforbusiness.com, said: “The greenshoots of recovery are yet to reach Britain’s SMEs and as a result many are finding trading even tougher now than before. They’ve been through a white knuckle ride and most are not expecting a smooth landing. In fact, 62% are bracing themselves for a further downturn in the economy before it starts to pick up steam again].

“And that’s when the real work starts in trying to rebuild their business and boosting sales and turnover – 44% of small businesses anticipate that this process of getting back onto an even keel will take them over a year]. The main message coming through is that Britain’s small businesses face a long and fragile recovery, but 83% are confident of surviving 2010, suggesting that the majority will get there in the end.”

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