Small business sentiment improving – confidence in business environment increases

The Small Firms Association (SFA) has released the findings of its Spring Business Sentiment Survey. Commenting on the figures, SFA Acting Director, Avine McNally said, “business confidence levels for the first quarter of 2013 have improved compared to this time last year. While domestic sales remain slow, there are increasing signs of stabilisation and business activity shows positive increases in the coming months.”

McNally said “improvement in small business sentiment and business activity levels are also encouraging and indicate that a gradual recovery is taking hold. Over a quarter of small firms indicate they were ‘more confident’ about their own business than they were three months ago. “Government needs to ensure that they assist small firms build on this positive sentiment by creating a business environment conducive to small business survival and growth.”

Overall Business Environment
The results show that 30% of respondents rate the current overall business environment as ‘poor’ or ‘very poor’, a drop of 20% when compared to 12 months ago. Some 23% of respondent companies rate the overall business environment to be either ‘very good’ or ‘good’. The outlook over the next three months is positive with one in four small firms expecting their business to be ‘very good’ or ‘good’ in three months time.

Own Business Environment
Nearly four in ten companies (39%) rate their own business currently as “very good” or “good”. While a fifth (20%) rate it currently as “poor” or “very poor”, a decrease of 13% on this time last year. 40% indicate they view their own business to be “good” or “very good” in the coming three months.

The business activity indicators show that expected changes over the next three months are more positive than previously experienced.

  • Over a third of small firms (31%) expect profitability to increase slightly.
  • Domestic market sales are expected to increase for 35% of small firms while nearly half of those companies who export expect to see increase in sales.
  • Just over four in ten companies expect an increase in their customer base (41%).

“The biggest challenge for small firms, especially those trading on the domestic market, is confidence among consumer. While there is a gradual improvement it remains fragile, as many positive signs have been knocked by concerns over the Eurozone and higher taxes, “said McNally.

McNally stated it is vital that confidence within the small business sector is built upon and called on the Government to “put in place policies that will assist this vital sector drive growth in the wider economy”. The SFA put forward the following three point plan:

  • Making SMEs and job creation the leit motif of Government policy;
  • Increase credit availability to SMEs and financing facilities to support expansion and improve cashflow;
  • No additional costs on employment in 2013.