Businesses braced for tough quarter ahead
By Rob Freeman | 27th July 2020
More than one in five small business owners expect performance to be "much worse" over the next three months.
The Federation of Small Business' latest quarterly Small Business Index found 23 per cent of the 1,400 owners surveyed expect the drop in performance from the previous quarter - up 13 per cent from this time last year but down on the first three months of this year,
At the other extreme, the number who expect prospects to be "much improved" rose to 13 per cent.
Among other findings for the next three month's outlook, the survey revealed:
- 58 per cent expect performance to remain stable or worse.
- 42 per cent expect a relative improvement as lockdown restrictions lift.
- 75 per cent say coronavirus is having a negative impact on confidence levels - down from 88 per cent in the first quarter.
- The construction sector was among the most confident with 29 per cent expecting a significant improvement with the accommodation and food service sector at 26 per cent.
- That figure is just two per cent for arts and entertainment with wholesale and retail at 13 per cent.
FSB national chairman Mike Cherry said: "The majority of small business owners have benefitted from the Government's emergency support measures but many have not.
"We urgently need to see the Treasury outline how it intends to support those who have been left out, not least company directors and the newly self-employed.
"Additional help for those who are being forced to stay closed while others reopen is also a must."
He continued: "We have to avoid a scenario where those who've received support are able to navigate choppy economic waters over the months ahead while others are left to sink."
The number of small firms which have reduced head counts in the last three months hit an all-time high of 23 per cent - those recruiting dipping to a record low of four per cent.
And there was another record as 75 per cent reported that profits fell - up 33 per cent from the same period last year - while 82 per cent said they are operating below capacity.
Among exporters, 65 per cent reported a drop in international sales with only 12 per cent reporting an increase, although the share expecting a rise over the coming quarter is in line with 12 months ago.
Mr Cherry said: "There was a lot to welcome in the Chancellor's summer statement where efforts to increase job creation and retention are concerned.
"That said, given so many small firms are already being forced to reduce head counts, policymakers will need to keep existing interventions under close and continuous review to ensure they are sufficient.
"Government at all levels should do more to help small firms putting protective measures in place."
The study showed a surge in small business finance applications with 34 per cent seeking new facilities over the past three months, up 20 per cent on the same period last year.
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