Small businesses more positive about economic climate

The proportion of small businesses that see the current economic climate as a major obstacle to business success has almost halved from its peak at the start of 2012, research finds.

Some 21 per cent of small and medium-sized enterprises (SMEs) rate the current economic climate as a major obstacle to their business in Q4 2013, down from a peak of 37 per cent in Q1 2012, according to a study by BDRC Continental.

While it is still the top rated factor of those tested, amongst some SMEs it is now no more of a barrier than legislation and regulation.

The proportion of SMEs receiving injections of personal funds declined in Q3 and Q4 2013 (currently 33 per cent). This was due to fewer SMEs feeling that they ‘had to’ inject funds (15 per cent in Q4 2013 compared to 24 per cent in Q4 2012).

Overall, 48 per cent of all SMEs plan to grow in the 12 months after Q4 2013, with the percentage being stable during 2013.

Applications for new/renewed finance are stable but limited and at lower levels in 2013 than 2012. Meanwhile, the proportion of ‘happy non-seekers’ of finance increased again to the highest level seen to date with little sign of any frustrated demand for finance.

‘Happy non-seekers of finance’ are SMEs that reported that they had not applied for finance in the previous 12 months and nothing had stopped them. This is the case for 79 per cent of SMEs in Q4 2013, the highest proportion to date (up from 73 per cent in Q4 2012).

Shiona Davies, director at BDRC Continental says, ‘SMEs ended 2013 feeling more positive about the economy. However, there are few signs of this leading to an increased demand for external finance.

‘There is little in the way of frustrated demand, as eight out of ten SMEs are ‘happy non-seekers’ of finance. Where applications have been made, there is a clear divide in success rates between on the one hand the larger established businesses or those renewing existing facilities, and on the other the smaller or younger applicants, especially those applying for the first time who are less likely to be successful.’

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Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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