SME Confidence Reaches 'Record-Breaking' Level

UK SMEs Are Reporting Record-Breaking Levels Of Confidence

15.09.2014

Fergal Dowling, Partner | +44 (0)121 214 5476

Small and medium-sized enterprises (SMEs) in the UK are experiencing record-breaking levels of confidence, according to a new report.

This is the finding of the latest Small Business Index published by the Federation of Small Businesses (FSB), which showed SMEs' confidence reached a rating of +41 during the third quarter of the year. This marks the first time it has achieved such a high score and the seventh consecutive quarter that optimism regarding the future has increased.

Results showed that 61 per cent of small firms that responded to the survey are expecting to experience some form of growth within the next 12 months, with 11 per cent predicting that this will happen 'rapidly'.

Some 33 per cent of SMEs expect to see growth with regard to their turnover during the next three months, with nearly one-fifth (17 per cent) stating they think their profits will rise.

In addition, an extra five per cent of small businesses increased their headcounts during the last quarter compared to three months earlier.

Confidence varied among different sectors, with financial services the most optimistic (+62) and firms specialising in health and social work seeing the most significant increases.

Regional variations were also recorded, with small companies based in the north-east seeing their confidence levels soaring from -7 in the third quarter of 2013, to +44 today.

However, the south-east holds onto its title of most confident region, with its index score of +52.

National chairman of the FSB John Allan commented: "We want policy makers to lock in this optimism and continue to back the self-employed and small businesses.

"As we head into party conference season, we'll be looking to all the political parties to spell out what they will do to encourage job creation, investment and reward entrepreneurs in the next parliament."

The FSB wants to see new measures introduced to help to bring business costs down, therefore enabling SMEs to take on more staff and provide a further boost to the country's steadily recovering economy.

Expert Opinion
This is very positive research which has highlighted how a great number of SMEs are feeling confident about their future prospects, with the majority expecting some form of growth across the year ahead.

"Findings of this nature demonstrate what has been known for some time now – simply that, after a difficult few years, small businesses are in a good position to push on and take advantage of the growing number of opportunities which are arising as the economy improves.

"While confidence is of course hugely important in business, it is vital that SMEs keep a level head and recognise the potential challenges which can emerge as they look to develop their operations. Growing pains are part and parcel of success and that is why having the right support from advisers, including lawyers, is a vital part of moving forward.

"Specialist, tailored support can make a huge difference and small businesses need to have experts on their side if they are going to enjoy a smoother journey to success."
Fergal Dowling, Partner