SME bosses keep the faith

Small business owners seem to think UK trading conditions can only get better from now on...

Last Updated: 31 Aug 2010

The Bank of Scotland’s latest Small Business Confidence Index found that SME owners’ confidence is still at a low ebb – but on the plus side, it hasn’t got any worse since last quarter. This suggests that some owner/ managers think that things have got as bad as they’re going to get in the UK – so from here on in, the only way is up…

The index has remained at 34, the same as last quarter but eight points down on the same period the previous year. It’s calculated by surveying confidence levels across five measures, some of which have actually deteriorated slightly over the last quarter. There were noticeable declines in the number of people who think this is a good time to be running a small business in the UK (down from 21% to 17% - we're amazed it's so high) and in the number expecting to increase staff numbers (down from 16% to 11% - this time last year it was nearly 30%). And the proportion expecting flat or negative growth in the next 12 months also jumped from 51% to 56%.

On the other hand, some of the indicators have actually improved. The number of companies expecting economic conditions to worsen in the coming year has fallen from 83% to 77%. And the proportion of entrepreneurs who think it will become more difficult to run a business in the next year has also fallen – albeit marginally, from 71% to 70%. For some reason, owner/ managers in Scotland and the Wales were the most optimistic, while those gloomy types in the West Midlands are expecting the worst.

OK, so these ‘positive indicators’ aren’t actually all that positive - for instance, closer inspection reveals that a measly 5% of respondents expect economic conditions to improve, and just 9% expect their jobs to get easier. So given all that, and given the continuous stream of economic bad news, we’re slightly surprised that confidence doesn’t seem to have dropped in the last quarter. We can only assume that SME owners are either seeing a bit of light at the end of the tunnel, or they’re confident in their ability to ride out the storm. Either way, it’s good news for the economy as a whole.

On the other hand, entrepreneurs tend to be an optimistic bunch – perhaps they’re just putting a brave face on what’s bound to be a pretty grim year for most small businesses...

In today's bulletin:
House sales hit 30 year low
Computer says No to LSE rally
No fire without smoke for Johnsons
Why managers must be more flexible
SME bosses keep the faith

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