Small business confidence low in 2018

9th January, 2018

Small business confidence continues to fall with domestic fears over the economy and Brexit at the fore according to the latest Federation of Small Businesses’ (FSB) quarterly survey.

A record number of small businesses are planning to close down or sell up as inflation and weak demand from customers dents their prospects. One in seven of small business owners are planning to downsize, close or sell their business over the coming three months. Three quarters of firms (73 per cent) report a rise in operating costs compared to this time last year. The figure is at a five-year high, with the increase frequently attributed to labour (40 per cent), utility (35 per cent) and input (33 per cent) costs.

At the same time, the survey reports that profitability has fallen. The proportion of small businesses (41 per cent) reporting a fall in profits is at its highest since 2013.

The domestic economy is mentioned most frequently by small firms as a barrier to achieving growth over the next 12 months. More than half (55 per cent) are concerned it will stifle their ambitions. Consumer demand (34 per cent), access to appropriately skilled staff (34 per cent) and regulation (20 per cent) are also frequently flagged as barriers to expansion.

The industry group’s small business index turned negative for the first time since the aftermath of the Brexit vote, as 31per cent of SMEs said they expect conditions to deteriorate in the next quarter while only 27per cent anticipate an improvement.

Nicholas Harris, part of the Business Recovery Team at PKF Francis Clark commented:

“SMEs are certainly facing challenging times as we go into the New Year. Late payment by suppliers is particularly damaging to small firms. We would advise any business that might feel exposed in the current economic climate to take professional advice as early as possible.”

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