New research from the FSB reveals rising costs and market uncertainty is driving an eighth of SMEs to consider closing, downsizing or handing on their business
From being forced to holding off on making new investments to finding it increasingly difficult to secure staff, small-business owners certainly haven’t had many reasons to feel bullish about Brexit. However, new research reveals that their optimism about the future hit a record low in the last quarter.
Having surveyed 1,230 SMEs’ head honchos, the Federation of Small Businesses (FSB) has revealed that confidence among the small-business community is at its lowest point since last year’s EU referendum – in fact, 13% are considering downsizing, handing on or closing their business all together. At the same time the number of firms reporting higher revenues has hit a four-year low. Faced with this outlook, it’s hardly surprising that only 27% of small firms expect to increase investment in the next three months, a 5% drop compared to the previous quarter.
The main reason for this pessimistic outlook is seemingly the rise of operating costs and market uncertainties. Of the people polled, 70% are now facing higher operating costs than they did at this time last year. And with the pound still at a low point, it’s hardly surprising that 63% believe the domestic economy and 35% consumer demand are the most significant barriers to growth.
But while consumer-facing businesses in industries like retail and entertainment had a particularly bleak outlook, exporting firms remained optimistic. Encouragingly, 39% of them report a three-year high in overseas sales and 35% expect export growth to continue in the upcoming quarter.
Commenting on the research, Mike Cherry, national chairman at the FSB, said that “policymakers have an opportunity to restore optimism” by considering an overhaul of the way companies are taxed. He continued: “The right Brexit deal, including a transition period of at least three years and a comprehensive free-trade agreement, will be critical to ensuring small firms can access key overseas markets.” He added: “A botched withdrawal from the European Investment Fund would create further barriers for small firms looking to access finance.”
Given the bleak outlook for small-business owners, successful divorce negotiations between Brussels and London are becoming increasingly vital for Blighty’s SMEs.