Small business confidence improving despite cost pressures
12 March 2012
Small business confidence has improved despite rising overheads and problems accessing finance, new figures from the Federation of Small Businesses (FSB) reveal. The FSB's ‘Voice of Small Business' Index shows business confidence has bounced back from the record lows reported at the end of 2011. Overall, the Index, which surveyed more than 3,000 FSB members, shows confidence rising for the first time in a year, with more than half of those surveyed aiming to grow in the 12
The survey shows considerable optimism about the scope for businesses expansion with a third of firms looking to increase capital investment plans. However, the findings also show these plans to expand could be under threat from rising overheads, weak customer demand and concerns over the cost and availability of finance.
Demand factors and weak domestic conditions are the dominant concern cited in the survey. Two in three small businesses considered the domestic economy to be a major obstacle to achieving their aspirations. Fuel was identified by more than 60 per cent of firms as a major cost driver, with upward cost pressures being seen from rent and labour costs too.
More than one in five firms cites access to finance as a major barrier to growth, with 41 per cent of loan applicants being refused. The FSB has called for the Government to look at alternatives to bank finance, such as peer-to-peer lending and the role than community development finance institutions can play in boosting the amount of finance that is available to small firms.
The FSB is also pressing the Government to create a Small Business Administration which would champion the needs of small businesses at the highest level and provide a single focus on issues such as access to finance and procurement.
John Walker (pictured), national chairman, Federation of Small Businesses, calls upon government to bolster this confidence by doing everything in its power to remove the barriers to growth which FSB members have highlighted. "That means taking action against rising energy and regulatory costs," he says. "It means looking at the proposals the FSB has put forward to give small businesses realistic alternatives to bank finance. And it means putting small business concerns at the heart of key government decisions through the creation of a US-style Small Business Administration."
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