Firms look to marketing to drive business

Increasing numbers of smaller businesses are boosting their sales and marketing efforts in order to speed recovery in the aftermath of the recession, a new study has found.

Following months in which costs have been pared down, firms, it appears, are now recruiting sales staff and beefing up marketing budgets as a way of combating difficult trading conditions.

The survey, conducted by the Forum of Private Business (FPB), revealed that over half of respondents (56 per cent) are optimistic about the future and expect turnover to grow in 2010.

The research formed part of the first of the FPB's Economy Watch panels, designed to test the waters of recovery as experienced by smaller firms.

The snapshot picture provided by the survey was upbeat in tone.

Only 13 per cent of respondents are still planning cost-cutting measures, while eight out of ten reported that the cost of borrowing was "affordable".

However, many businesses still envisage a rocky road to recovery. Six out of ten said they anticipated a rise in business costs this year, and three-quarters expect tax increases.

Thomas Parry, the FPB's research manager, commented: "We appear to be seeing an upturn in confidence among SMEs and, by investing in sales and marketing strategies, small business owners are showing determination and entrepreneurial flair."

But Mr Parry warned that much of the optimism was based on the hope of a recovering economy and increased business and consumer confidence.

He continued: "Political, economic and currency stability are all important too, with a proportion of businesses suffering from the weak pound. Also, the difficulty for businesses in terms of planning is indicated by the fact that almost one in five businesses are uncertain about the support they may want in the next month."

Mr Parry went on to point out that funding may still yet be a serious issue for small firms.

Many businesses have a relatively high level of debt, although the low base rate has made the cost of finance relatively affordable for the time being. However, those firms that described borrowing as affordable also expressed concerns that, when economic growth becomes more sustainable, the cost of credit is likely to increase.