Small business confidence falling, says FSB

News Article - 21 January 2011
Category: Business

Confidence amongst small businesses fell in December, according to a new survey released by the Federation of Small Businesses' (FSB). The fall was due to a combination of factors, including severe weather and the looming VAT rise.

The FSB's quarterly survey also found that confidence in the service and transport sectors had been particularly affected, no doubt due to the pressures put on these sectors by severe weather throughout December.

The survey also revealed that more small firms are likely to reduce their workforce in 2011 in efforts to stave off financial pressures expected to hit throughout the year. Some 12.4 per cent of firms expect to shed staff, up from 10.4 per cent in the previous quarter.

An FSB spokesperson said that financial constraints on small businesses in 2011 will likely reduce the potential for economic growth.

"Overall, the figures show that the private sector recovery lost momentum in 2010, and as the constraints on businesses cashflow increased from utility bills, fuel duty and VAT combined with the public sector cuts, growth in 2011 is also likely to be sluggish at best."

The FSB has urged the Government to introduce a fuel duty stabiliser, designed to lower duty when fuel prices rise, in order to give small businesses more breathing room. Calls were also made for the Bank of England to keep interest rates low to help the economy focus on growth, a viewpoint also held by a recent report from economic forecasters at professional services firm Ernst & Young.

Small businesses must consider how operations will be affected by key risks in 2011, such as the impact of the VAT rise. All firms must take proactive measures to increase profitability and efficiency to help stave off any risks that threaten survival.

Access business software can help; the budgeting functionality, for example, allows firms to compare performance against budget at any time to see where inefficiencies are located. These can then be plugged to improve future financial performance.

For more information, please call us on 0845 345 3300.

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