Confidence among SMEs at record levels

Confidence among UK small business owners is at a record high, according to the latest data from the Federation of Small Businesses.


The Small Business Index, a measure of confidence among small UK firms, reached +41 points in Q3 2014, the highest level ever recorded.


It showed that every sector recorded a positive outlook for the coming three months while 61% of firms revealed they are planning growth in the next year.


The results mean a positive outlook has now been recorded for seven consecutive quarters and the index showcases the importance of small businesses to the economic recovery.


Of all regions, the North East has shown the biggest annual improvement, registering a score of +44 compared to -7 a year ago.


Meanwhile businesses in the South East show the most confidence, recording a score of +52 while there were also positive reports relating to profit levels and job creation.


One fifth of firms expect their profits to rise in the next quarter while hiring intentions are reportedly at an all time high.


Confidence in the financial industry was especially high while considerable improvement was noted in the healthcare industries.


Despite the confidence noted by the Index, expansion can prove risky if it is not carried out in the right way – it can be easy to rush decisions without considering the financial consequences.


In some cases it can result in losses, while in extreme circumstances a complete restructuring might be necessary to bring the finances back into line.


Carefully budgeting for change reduces the risk of this occurring while it is recommended firms have sufficient back-up finances to cover any emergency situations.


If done properly, businesses can take advantage of the economic situation, expanding the firm and increasing levels of staff pay.


Government incentives to decrease business costs could be a driving factor in potential growth levels, while current levels of optimism paint a very positive picture.


By Phil Smith


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