Business confidence up but firms still need cautious approach
Small business confidence is at a one‐year high according to the Federation of Small Businesses, but the situation is still prone to change.
The organisation’s small business index (SBI) was at +12.9 for the second quarter, up from +6 for the first three months of this year and at a high last seen 12 months ago.
Some 35% of businesses report that they expect a boost in performance in the third quarter, while only 24% expect their situation to worsen.
This is a significant improvement from at the end of the first quarter, but uncertainty over Brexit and the state of the economy remains a threat.
That is coupled with rising rates of corporate insolvency among UK businesses, with figures from R3 showcasing a 13% rise in the first three months of 2018.
In positive news for businesses, 62% report that profit levels are at a 12‐month high, while international sales have also increased in more than 80% of cases.
Growth intentions are also up, as nearly nine in ten firms either plan to expand their operations or consolidate their existing position.
The Federation of Small Businesses’ Development Manager for South and East Yorkshire, Claire Reading, said there are many positive signs, despite weak domestic growth.
However, she also warned that a lack of progress with Brexit negotiations could hit confidence hard, especially as small firms are determined to get a deal that works for them.
Businesses also view General Data Protection Regulation as a barrier to growth, as 29% of firms now view it that way, up from 19% one year ago.
However that is some way behind the domestic economy, as 57% of companies list it as a predominant issue, while a lack of skilled staff and rising labour costs were other commonly listed barriers.
The late payment situation in the UK, where firms are owed upwards of £14 billion in unpaid invoices, could also push more businesses towards insolvency.
Any business with concerns over its financial situation should act quickly by seeking appropriate advice into what refinancing and restructuring routes might be available.
By Phil Smith