It was recently revealed by a survey from the Federation of Small Business (FSB) that 13% of respondents are looking for a way out of their business or at least to downsize it. This is the highest percentage since the FSB started measuring in 2012.
The FSB’s Small Business Index is based on a survey of 1,230 of its members. The survey has shown that optimism around smaller businesses has dropped. In the last one, the index fell to one
point, down from 15 in the previous quarter. Confidence was particularly low in the retail and entertainment industries.
Last month a survey by Lloyds Bank found that confidence among 200 companies with a turnover of at least £1m fell by 13% to its lowest level in a year. The percentage of firms reporting higher confidence in business had decreased by 7 points to 38%. The percentage reporting lower confidence had risen to 21%.
Increasing costs
The FSB attributed this drop in confidence to rising costs of doing business and the result of a weaker UK economy.
Mike Cherry, National Chairman of the FSB said: “A record proportion of business owners currently expect to downsize, sell or shut up shop, while rent and taxation are frequently mentioned as causes of increased costs. We need to see more support in this space – that includes ending enforcement of the ridiculous ‘staircase tax’.”
The staircase tax came about when some companies discovered that they were paying extra businesses rates because they had an office divided by a staircase.
Even for those looking to expand and grow a workforce, there are plenty of problems. The FSB said that smaller firms were also looking to increase their workforce.
However, Mr Cherry said, “Employment intentions are up, but so too are labour costs. This is causing significant problems in a number of sectors, not least hospitality and retail. With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.”
Increased optimism among exporters
It’s not all bad news for businesses in the UK at the moment. The FSB saw that confidence has been increasing among exporters. 40% said that they had seen an increase in overseas sales.
This has been partly because of the weakened pound as UK products are now more competitively priced to overseas buyers.
Have you seen business confidence drop? What do you think the main reasons for this? Let us know what you think. Find more help and support for your London-based business in our information centre.