Shhh ... confidence is returning to small businesses
BY Sam Holliday
FSB Development Manager for Gloucestershire, Bristol, Bath & South Gloucestershire
"Whisper it quietly but it is just possible that confidence among small business owners and the self-employed may finally be starting to return...
"We have had the most traumatic three years small businesses have had to face in modern peacetime with Covid, political instability and economic meltdown combining to make life as difficult as possible for those who just want to get on with the business of running their own business.
"It has been a truly crazy period indeed.
"However, our latest Federation of Small Businesses (FSB) quarterly survey - both nationally and regionally in the South West - has shown a marked upward turn in positivity with our best overall figures for a year. Yes, they are still well behind where we want them to be but compared to the record lows of confidence we saw at the start of the year they are definitely heading in the right direction.
READ MORE: Business confidence in South West remains high, despite dip - Lloyds
"So what may have changed? What has caused this small but cautious step forward in confidence?
"Well, the truth is most of the factors that have hit confidence so badly for SMEs and the self-employed for so long haven’t actually changed – but their impact is perhaps now starting to reduce, however slightly.
"Take prices for instance. Inflation may still be ridiculously high and the fear of ever rising interest rates is also causing great concern to many businesses but there is a growing sense that we may have passed the peak of both energy costs and prices at the pump.
"That difference in fuel costs will be apparent to any of us who have visited the petrol stations lately. Last June we saw forecourt diesel costs hit an eye-watering 199p per litre – the current average is now over 50p cheaper. For the many business owners who rely on sending their goods out via our roads that is a huge drop and has a major, direct impact on the bottom line. And the indications are that isn’t likely to reverse again in the coming months.
READ MORE: One in six SMEs have less than £1k in savings says Yell
"Energy costs are a bit more tricky (and are still a nightmare for many) but even here there are some glimmers of hope. Compared to the time before the sudden, frightening, surge in prices last year, costs for both electricity and gas remain at a very high and unprecedented level and as a result some businesses are being absolutely crippled by them on a day to day basis . But the genuine fear that this trend will continue forever at the same upward rate appears to be abating and although it is vital the Government keeps supporting business through this – and encourages companies to let SMEs re-negotiate the fixed deals they were forced to take out when numbers hit their peak last year – the situation here may not be as bad as many expected in the short to medium terms.
"Of course these are just two items that are heading hopefully in the right direction which may have contributed to the confidence mood change and we can’t forget that many other real issues still remain. However after a lengthy period when it seemed the only news for small businesses was bad news we can only keep our fingers crossed that they are indications that the immediate future may be a bit brighter than many predicted. We shouldn’t get too carried away yet and it is clear confidence levels still remain fragile but any improvement has to be welcomed so let’s just hope that this cautious but important rise in SME positivity continues regionally and for the UK as a whole in the coming year..
*You can read more about (and download) our national FSB survey at https://www.fsb.org.uk/resources-page/welcome-rebound-in-small-business-confidence-but-cost-of-living-squeeze-is-holding-back-growth.htmland and to see the South West version which was broadly in line with the national findings see https://www.fsb.org.uk/resources-page/south-west-small-business-index-q1-2023.html.
