Business confidence continues to plummet
Business confidence among small firms is dropping faster now than in the wake of last year’s EU referendum, new research shows.
Rising inflation, coupled with economic and political uncertainty are causing concern among SMEs, with a greater number worried about the future than at any point in the last 16 months.
Commissioned by retail giant Amazon, the Capital Economics Index of Business Optimism has dropped from +5 in September 2016 to -8 this year, signifying a huge drop in market confidence.
The findings mirror those of a similar survey by the Institute of Chartered Accountants, while only businesses in the West Midlands region reported that they did not expect conditions to deteriorate in the coming 12 months.
Given that the index has dropped from a low of -13 to -22 when it comes to reviewing overall market conditions, it would appear many SMEs are fearful of what the future holds.
Chief Project Economist at Capital Economics, Mark Pragnall, pointed to a number of key events which have affected SME confidence, including the triggering of article 50 and the snap General Election.
This has seen confidence swing from positive to negative during the last 12 months, as 39% of SMEs now view Brexit in a bad light, compared to just 12% who believe it will boost their business.
According to the Office for National Statistics, a record £14.2 billion deficit was recorded between imports and exports in August.
More than half of exporters based in the UK say the EU region is one of their most important customers and will therefore have a keen eye on Brexit negotiations.
The key for many small businesses is to ensure that they have adequate contingency plans in place should they experience a reversal in fortunes should sales slow or economic uncertainty take its toll.
Having several strategies in place can help to mitigate any negative impacts that might accompany financial trouble while turnaround management services can assist with short-term business requirements.
These may include overcoming cash flow issues, generating cash via the sale of non-core assets or developing a strategy based on comprehensive cash flow forecasts.
All of these factors can provide a safeguard for businesses who are facing an uncertain future, but it is vital that business owners act quickly at the first signs of financial trouble.
By Phil Smith