11 September 2013

Many entrepreneurs are pessimistic about recovery

Entrepreneurs are pessimistic about claims the UK economy is recovering, a new report claims.

R3, an association for business recovery professionals, quizzed more than 500 business owners about whether they agreed with Chancellor George Osborne’s positive economic outlook. The findings are revealed in the British Distress Index and show that 21% of entrepreneurs strongly disagree that the nation’s financial situation is on the up. This also goes against the positive prediction from the British Chambers of commerce - see our post from the 2nd September

Just 5% of business owners were in strong agreement with Mr Osborne’s comments.

The report shows the owners of large businesses feel more hopeful about the economy than those running small businesses.

Among the bosses of big businesses, 55% were optimistic, while 35% disagreed with the chancellor’s economic outlook. But 51% of start-up and small business owners did not share Mr Osborne’s view, compared to 40% who agreed with the politician.

No time for complacency

R3 President Liz Bingham says: “There has been plenty of positive economic news recently, but it’s important that we don’t forget that a lot of businesses, small businesses in particular, still feel they have significant hurdles to overcome. Now isn’t the time for complacency.

“Larger businesses may well be confident that they can ride out any remaining bumps on the road to recovery, but small businesses still face significant pressures, whether it’s access to finance or simply the pressures of growing demand.”

She adds: “It is easily forgotten that one of the most dangerous times for a business is immediately after a recession, when a lack of investment as a result of recessionary cutbacks and the stress of servicing growing demand take their toll. While it might look like economic recovery is taking place, it may not feel that way for businesses on the frontline just yet.”

But there are positive signs

Although entrepreneurs are remaining cautious, the report claims fewer businesses are showing signs of distress. A fifth of the companies polled said their profits had fallen, which is 7% fewer than in March 2013.

A total of 35% of businesses were reporting at least one of the key signs of business distress, which are falling profits, dwindling sales volumes, regularly using their maximum overdraft, falling market share and redundancies. This figure is down from 40% in March 2013, and down from 53% in June 2012.

And 53% of businesses claim they have actually grown, up 6% from the previous quarter.