Small businesses are feeling much more confident as shops reopen in England and Wales, according to the Federation of Small Businesses (FSB).
The group reports that its UK Small Business Index confidence measure has risen to 27.3 in Q1 2021, up from -49.3 in the last quarter. The index is at its highest level since Q3 2014 when it hit +41.00 and is in positive territory for the first time since Q2 2018.
Figures also show that close to two-thirds (58 per cent) expect performance to improve while fewer than a third (31 per cent) are expecting it to worsen.
More than half (51 per cent) of the almost 1,700 business owners surveyed believe their revenue will increase over the next three months. That’s the highest proportion since the summer of 2015. Fewer than one in four (24 per cent) expect sales to fall. The same figure stood at 84 per cent at this time last year.
Even more (53 per cent) aspire to grow their businesses over the next 12 months, the highest since Q3 2019, marking a 22-point percentage jump since this time last year.
It’s not all positive, though. Research from Nucleus Commercial Finance also reveals that 21 per cent of business owners feel anxious, 17 per cent feel stressed and 15 per cent worried. Only one in ten feel supported. From a customer perspective, more than one in five (21 per cent) worry about customers adhering to social distancing. A slightly smaller 19 per cent are concerned about implementing new health and safety measures. With the majority of consumers turning to online shopping over the past year, one in eight (13 per cent) of SME owners are worried about customers staying online rather than coming in-store.
One key question on business owners’ minds is when revenue will return to pre-pandemic levels. A study from Tide shows that 37 per cent are unsure when this will happen. A substantial 20 per cent think it will take over six months while one in ten (14 per cent) believe it will take over a year to return to pre-pandemic levels.
The number one concern for small businesses is the time it will take to rebuild customer bases. Of those who stated it’ll take more than three months to bounce back, nearly three quarters (72 per cent) cite this as the main reason. The second most common concern is the need to adapt businesses to meet Covid safety regulations.
More help needed
The FSB is also calling for cuts to hiring costs amid redundancy fears, as well as renewed efforts to tackle late payments and innovative approaches to debt.
One in seven (14 per cent) small firms say they are likely to make some or all of their team redundant this quarter.
FSB national chairman Mike Cherry said: “It’s fantastic that our shops, hairdressers and gyms can get back to doing what they do best all over England from today, with some restrictions easing in other parts of the UK as well.
“It’s worrying to see such a sizeable proportion of employers fearing redundancies over the coming months. Initiatives like Kickstart, as well as incentives to take on apprentices and trainees, need to be delivered efficiently over the coming months to protect against a job market shock and support the young people that have disproportionately borne the brunt of rising unemployment.
“Policymakers also need to look at measures to encourage hiring activity. Bringing down the non-wage costs of employment, starting with employer national insurance contributions, which essentially serve as a jobs tax, would certainly help.”
He said that support needs to go even further still.
“With emergency loan repayments now starting to bite, the Government should carefully consider routes to realising economic value from the facilities it has underwritten: an approach to repayment based on the student loan model and greater adoption of employee ownership trusts could both mark constructive ways forward.
“As the economy shifts, support measures need to evolve – particularly where support for start-ups is concerned. The Help to Grow initiative should be urgently reformed in order to both widen its support remit and make it open to all small business owners as they start out, not just those that already have staff.”