75% of small businesses believe the economy will see an upturn in 2010 according to research from BT Business, with 35% predicting an improvement by January 2010.
The 2009 Business Pulse report, with 7,200 respondents, is the UK’s largest survey of small and medium sized businesses this year. In spite of the challenging environment, 61% are confident about their business prospects for the coming year and 45% say their business operates for the better as a result of the downturn. 41% believe small businesses will innovate and diversify to create new industries as the UK emerges from the downturn.
The impact of the recession is still raw for 18% of firms who say it’s had a negative, lasting impact on business performance. 43% say they’ve lost customers, 17% say business costs are up and 16% cite an increase in debt.
The research measured the current health, drivers and inhibitors to successful UK business, to understand the full impact of the recession on small firms. Respondents were indexed by age, gender, region and industry sector and findings show that females aged 46-55 have been most affected by the recession; Northern Ireland, London and the West Midlands are the most affected regions, with the construction sector and companies with two-five employees hardest hit. Nationally 48 % of small businesses say turnover is down with nearly a quarter seeing a dip of more than 10%.
Commenting on the results at the start of Small Business Week 2009, Mick Hegarty, strategy director, BT Business said: “The small business community has fought bravely to survive the downturn. Our findings show that we are now at a tipping point. Despite the obvious knock to confidence, positivity about when the upturn will come is encouraging. The UK’s smaller firms are innovating to succeed and now more than ever, the right support and resources must be available to allow them to compete and thrive.”
Mark Prisk, MP, Conservative Shadow Small Business Minister, launches Small Business Week today, where the full findings will be revealed. He added, “Small businesses are vital to the country’s economic recovery; they don’t want a hand out, but a hand up. They know that if they make it in the tough times then they can prosper in the better times. It’s important that we listen and understand to the practical problems which they face, so that established companies can grow and new businesses can flourish.”
The Business Pulse identified the positive steps firms have taken to manage the downturn. Smaller organisations have been quick to change the way they operate with 45% of respondents saying that the recession has changed their business for the better by enabling them to reduce their spending (54%), better manage and retain their customers and market their business more effectively (26%).
Word of mouth plays a crucial role in business survival, with small firms looking to peers, friends or family for advice. 47% of respondents have approached peers and 32% choose friends and family before their banks (29%).
External support is still critical to drive business forward. 43% of respondents want more support around access to finance, 39% ask for more access to legal and regulatory advice and 33% request more advice about growing their business.