General
12 Oct 2009

The recession has not lifted for Britain's small firms but they seem more concerned about regulations and taxation

Quarterly Survey of Small Business in Britain

Quarterly Survey of Small Business in Britain

The recession remains the biggest business problem for Britain’s small firms and there are few signs that the recession is lifting for them according to the latest Quarterly Survey of Small Business in Britain by The Open University Business School in association with Barclays Bank and ACCA.

For the first time in the 25 year history of the survey, over half of firms (52%) have seen their sales fall, while the economic climate (52%) and cashflow (34%) remain their top problems, as they have been for all this year.

However, the pace of decline appears to have slowed and a resilient almost one quarter of firms (22%) continues to report increased sales since the recession began. Most firms (61%) have not changed their employment levels, but well over a quarter (29%) has cut staff over the past year with only 10% recruiting new workers.

Small manufacturers previously reported the most negative sales performance, with a drop of -40%. However there has been an improvement, even though the figure is still negative, to -27%. The other sectors reporting a better sales balance than in the previous survey are wholesale, hotels & restaurants, agriculture and retail. Official figures also seem to indicate a turnaround within manufacturing as a whole with value added falling by only 0.2% in the second quarter after a precipitous fall of 5.5% in the first quarter.

The outlook for the coming quarter looks more promising. With one third of respondents expecting to increase sales, there is a net positive balance of 3% on sales and, although the net balance on staffing is still negative, at -5%, it looks a lot healthier than the current levels. And, with regard to the advice and information that firms are seeking, there are indications that small business owners are looking forward to a return to more normal trading conditions.

Most firms are not seeking advice and information on the direct effects of the recession but on finance or debt issues (17%), improved marketing (14%) or even managing bankruptcy and insolvency (7%) – but are focussed on the more perennial issues concerning regulations (30%) and taxation (31%).

Professor Colin Gray, professor of enterprise development at The Open University Business School said, ‘small firms are clearly still reeling from the effects of the recession but resilience and flexibility are among their noted strengths. There are already clear signs that most small firm owners are beginning to look beyond the recession. We hope that managing the recovery does not also pose too many problems for them.’

Additionally, 17% of firms have sought information on regulations but were unsuccessful in obtaining the advice and information they were looking for. One in ten firms have found it hard to get information on financial management, sources of finance, debt management or market insights. 38% successfully found information on taxation (as opposed to only 6% who did not find what they wanted).

The survey results also found that the more entrepreneurial firms (as measured on the survey’s self-assessed entrepreneurship scale), were not only much more positive about the future but also were much more aware of the skills and knowledge they will need to manage the recovery. Advice and information on training and staff development was their third highest priority and this is an area where respondents were satisfied with what they found.

The survey of 848 small business respondents was carried out by the enterprise research team at the Open University Business School with sponsorship by Barclays Bank and ACCA (Association of Chartered Certified Accountants). It was based on questionnaires and interviews with SMEs in the third quarter of 2009.

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