24 Jan 2011

Survey reveals clear signs of small firms emerging from recession

Quarterly Survey of Small Business

Quarterly Survey of Small Business

Small firms in Britain are now showing positive sales performances for the first time in two years and new business starts continue to rise, according to the latest Quarterly Survey of Small Business in Britain from The Open University Business School.

With the exception of small retailers, a balance of small firms in all sectors reports an improved sales performance. Small firms are also generally more positive about prospects for sales in the next quarter, with hotels and restaurants being the only sector not expecting any improvement. In the last survey, hotels and restaurants reported the poorest sales performance (-30% over the previous 12 months); though it remains negative, this quarter’s figure has improved sharply (to -4%).

In terms of employment, small firms remain fairly static. However, for the first time in two years, small manufacturers are reporting increases in employment (+13% over the last 12 months). The Survey indicates considerable regional differences with small firms in the South West having the most positive employment balances (+12%) while those in the North East demonstrated the sharpest decline (-13%).

The economic climate remained by a large margin the top business problem reported by small firms (51%), followed by cash flow (33%) and government regulations (30%).

The research also found that less than one in three firms reported any spending on their environmental impact over the last year. Relatively larger businesses, with 20 or more employees, are taking the lead in this area, with 45% reporting investments in equipment and machinery or on some form of environmental assessment compared to fewer than one in five of the smallest firms (19%).

The most entrepreneurial firms that have invested in green issues (37%) compared to the least entrepreneurial (16%). There are also signs that small firms are beginning to take an active interest in their carbon emissions. While just 12% of firms overall report having measured their carbon footprint, this figure increases to almost a quarter for firms with 20 or more employees (22%).

Almost a quarter of the firms surveyed have considered measuring their emissions (23%) and a further 7% have plans to do so in the next year. When seeking advice on environmental issues, many of the smallest firms rely on the media (37%) and informal contacts (27%). Environmental information from Government-funded services seems to be reaching the larger firms surveyed (24%), but very few of the smallest firms make use of these sources (6%).

Dr Richard Blundel of the Open University Business School commented that, ‘Britain’s small firms have a significant impact on the environment. As the economy recovers, it is important that we look at how they are operating and what kind of help they need, particularly in relation to carbon emissions. There are some positive signs, particularly with the more entrepreneurial firms who are identifying opportunities to save costs and to build on personal commitments to environmental issues. However, there are still major challenges with smaller and less entrepreneurial firms, who seem to be lacking support.’

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About the research
The findings have been published in The Quarterly Survey of Small Business in Britain, conducted by the Open University Business School and supported by ACCA (the Association of Chartered Certified Accountants) and Barclays Bank. The report is now in its 26th year. The 819 firms that responded to the survey are drawn from two sources – some 224 members of the OUBS small enterprise database of past quarterly survey respondents who responded online; plus some 595 small businesses with a turnover of £50,000 - £1 million drawn from a structured database that reflects the distribution of industries in Britain (this sub-sample was recruited and interviewed by telephone by BDRC Continental). The online interviews were completed during October and November 2010 and the first wave of telephone responses was gathered in October and the second wave in November. Sectors covered include: health & education, transport & travel, retail, hotels & restaurants, agriculture & forestry & fisheries, business services, wholesale, construction and manufacturing. The firm-size definition used in the survey employee-based: sole-proprietor = 0 (only the owner); 1-9 = microfirms; 10 – 19 = small; 20+ = medium.

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