Small businesses forecasting recovery

Almost a half of small firms are anticipating an upturn in sales during the next year, a business group has claimed.

According to the Forum of Private Business (FPB), a survey of its members found that 47 per cent believed that trade will increase in the coming months.

Some 13 per cent of the firms polled were already seeing an improvement in their order books, while a further 15 per cent were predicting an increase in sales over the next three months.

Importantly, 37 per cent of the respondents to the FPB’s quarterly survey were planning on recruiting new staff by September 2010.

With sterling still weak, 12 per cent of FPB members said they would start or increase exports of products and services.

Micro businesses (those with fewer than nine employees) were particularly optimistic and the most likely to expand their business in the next six months; the majority said they were anticipating running concerted sales and marketing campaigns.

A significant concern, however, was the continuing problem of finance.

Over three-quarters of firms (77 per cent) reported a deterioration in lending terms during the last calendar year, with many being forced to provide more security to cover their current lending levels.

Just 4 per cent said they had experienced better access to working capital. Of those surveyed, 65 per cent said it was harder to access finance for growth, and 68 per cent said the cost of finance had increased.

Another barrier to growth was a lack of vital skills among staff. Almost half (45 per cent) of firms claimed that they needed to raise skill levels amongst their workforce through training.

Of those, 29 per cent highlighted sales as an area where training was required, while 13 per cent wanted to boost their employees’ abilities to multi-skill and adapt.

Phil Orford, the FPB’s chief executive, commented: “These figures show that, while things are certainly still very tough for many small businesses, there is a feeling that we are perhaps through the worst of it and things should soon start to improve.

“However, a lot of our members are still reporting crippling problems in accessing finance and there is a fair amount of animosity towards the banks over the issue. Ironically, as the economy picks up, this situation could actually get worse as smaller firms find they are unable to get the credit they need to keep up with their order books.”