North West small firms believe business can grow
Research carried out by the Knutsford-based Forum of Private Business (FPB) has found that while some recession-hit small businesses in the region are still making redundancies and cutting costs, most expect to see a much-needed upturn in trade over the next year.
The national business support and lobby group, which is based in Ruskin Chambers on Drury Lane, found that over half (57%) of the members it surveyed in the North West expect to see an increase in sales and orders by September 2010, while almost a third (31%) hope to recruit more staff over the same period.
Significantly, a tenth of the firms in the region surveyed by the FPB are already seeing an upturn in their order books, while 11% expect to see an increase in sales over the next three months and 17% believe trade will increase over the next six months.
Meanwhile, 46% of the North West based respondents to the FPB’s quarterly Referendum survey, entitled ‘Preparing for Growth’, said they expect to expand their business over the next year and 13% hope to do so within the next six months.
However, the optimistic outlook of many small businesses in the region is hampered by fears over accessing the finance they will need to cope in an economic upturn.
Reflecting widespread dissatisfaction with the banks and major lenders, more than two thirds (67%) of the North West’s small business owners surveyed said the terms and conditions of lending had worsened, with the remaining 33% simply stating that there had been no change in the situation.
More than half (55%) of small business owners said the cost of finance had increased, with only 18% believing it had fallen and the rest (26%) reporting no change. 53% of businesses reported seeing access to working capital worsen over the past year, with just 5% reporting an improvement and the rest (42%) seeing no difference.
Similar figures were reported when businesses in the North West were asked about accessing finance for growth, with none reporting an improvement, 54% believing the situation had got worse and 46% seeing no change.
When asked how finance for small businesses could be improved, 41% of those surveyed said they want the cost of lending to fall and exactly a fifth (20%) of small businesses in the region said they want to see greater competition or choice among lenders.
Additionally, 24% said greater flexibility in the terms and conditions of loans to fit the changing needs of their business would be desirable, while 22% want to see a drop in the time they spend complying with the requirements attached to funding. A further 35% want to see loan arrangements simplified.
Commenting on the Referendum findings, FPB chief executive Phil Orford said they reflect a mood of ‘cautious optimism’ among small businesses in the North West.
He said: “These figures show that, while things are certainly still very tough for many small businesses in the region, 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.
“The FPB has consistently urged banks to ease restrictions on lending to small businesses and assess each application on a case-by-case basis, rather than classing entire categories or sectors as being too risky to lend to. I would repeat those calls and hope to see desperately needed credit begin to flow more freely as we head out of recession.”