Small Businesses See Election as Platform for Change But Feel Threatened by Uncertainty

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Business owners see Thursday’s election as an opportunity to change Britain’s enterprise culture for the better, with one in five intending to vote for the party they hope will manage the economy most effectively, according to new research from the Forum of Private Business.

Entrepreneurs want better support, a clearer tax regime – including a reversal in the planned National Insurance rise – prompt payment and less red tape, although there is some scepticism about the delivery of this last measure.

Business owners see Thursday’s election as an opportunity to change Britain’s enterprise culture for the better, with one in five intending to vote for the party they hope will manage the economy most effectively, according to new research from the Forum of Private Business.

But many fear their businesses could suffer because of the uncertainty created by unclear tax plans, the threat that spending cuts will jeopardise public sector opportunities and the possibility of a hung parliament.

According to the Forum’s latest Economy Watch member panel survey, 55% of respondents view the public vote as a platform on which to highlight the issues facing their businesses. Those mentioned most frequently were red tape, economic management and the tax burden.

However, 14% of the small businesses surveyed feel threatened by the looming election because of the uncertainty they believe it could create, with many citing a lack of detail on tax plans from the main political parties and possibility of a hung parliament as the main reasons for this uncertainty.

In addition, with spending cuts inevitable in order to plug the gap in public finances, the election is viewed as a threat by businesses who undertake a significant proportion of work in the public sector.

“Small business owners are generally confident that the election can be used to highlight their concerns and usher in economic change. However, many feel threatened by the uncertainty caused by a lack of defined policies on tax and red tape as well as threats to public procurement in the wake of anticipated spending cuts and the possibility of a hung parliament,” said the Forum’s Policy Representative Matt Goodman.

“Entrepreneurs want better support, a clearer tax regime – including a reversal in the planned National Insurance rise – prompt payment and less red tape, although there is some scepticism about the delivery of this last measure.”

In all, 18% of business owners consider ‘economic management’ to be a significant factor that will influence their vote. The same number believe ‘support for small businesses’ will be one of the main issues affecting their decision at the ballot box.

Further, 17% cited a better tax regime as a significant voting factor. Other influential factors included addressing the planned National Insurance rise (10%) and reducing red tape and state interference (9%).

The survey’s other findings are as follows:

Business confidence

Overall, business confidence has increased compared to the previous month’s Economy Watch survey, but more entrepreneurs remain doubtful about growth prospects in 2010.

In total, 44% of respondents are ‘confident’ or ‘very confident’ compared to the 39% recorded in March. However, more than half (53%) are ‘not very confident’, ‘pessimistic’ or ‘very pessimistic’.

Economic indicators

In April orders increased for 35% of the businesses surveyed, fell for 25% and remained unchanged for 39%. Turnover increased for 38%, fell for 21% and stayed the same for 41% of respondents.

Profitability was up for 33% of businesses, down for 32% and stayed the same for 35%.

Late payment was more of a problem for 29% of respondents, less of a problem for just 4% and the same for 67%.

Almost a quarter of businesses (24%) increased investment in sales and marketing (with 11% reducing this spend and 64% indicating no change) and 22% increased investment in machinery and equipment (with 18% spending less and 60% no change). Further, 17% increased staff training, 10% reduced it and 73% made no change.

The cost of doing business – excluding tax - increased for more than a third of respondents (36%), fell for just 3% and remained unchanged for 61%. The tax burden was greater for 19%, fell for 35% and stayed the same for 78%.

Access to finance

Fewer business reported better access to finance, with just 3% saying it has improved compared to 6% in March. The same number reported a deterioration as did in the previous month (13%) while 66% indicated no change, up slightly from 63% in March.

Better financial management had resulted in businesses being able to better access finance in previous months but respondents reported a number of reasons for a deterioration in April. These include poor returns from invoice discounters, increased late payment by debtors and increased lending charges.

Cost of finance

The number of businesses believing that finance has become more affordable has increased, with 85% reporting it as ‘very affordable’ or ‘affordable’ compared to 78% in March.

In total, just 10% feel that finance is ‘very unaffordable’ or ‘unaffordable’, which is consistent with the data from the last two months.

Business priorities and needs

Improved business and consumer confidence was selected by 26% of entrepreneurs as the main factor that would help their businesses grow – up by 2% from March.

The next was ‘internal business development’, which was chosen by 24% (down slightly from 26%), followed by economic improvements and stability, selected by 21% of respondents (a slight fall from the 25% recorded in March).

Other factors were training and recruitment initiatives (11%), specific industry incentives (10%) and addressing finance issues (10%).

Anticipated business investment

One in three respondents (32%) now anticipate making no investment in their businesses in 2010, up from 24% in March.

In all, 45% expect to invest in sales and marketing (down from 54%), 14% in machinery and equipment (down from 18%) and 19% in product and process development (down from 25% in March).

Employment

Employee numbers have dropped by 4% over the last year and approximately 8% of businesses have reduced their working hours.

Some of the changes were in agency staff or use of contractors. However, a number of vacancies from March remain unfilled despite relatively high levels of unemployment, indicating that some businesses are looking for highly specialised staff.

The monthly Economy Watch member panel survey is carried out as part of the Forum’s Communications Director business support solution. For more information call 0845 612 6266 or visit http://www.fpb.org/page/734/Communications.htm.

Notes to editors

Formed in 1977, the Forum of Private Business is evolving following a year of intensive research about the real needs of small businesses.

As an invaluable extension to its members’ teams the not-for-profit organisation has developed a range of tailored business solutions to support, protect and reassure small firms throughout the lifecycle of their businesses.

These are: ‘Finance Director’, ‘Legal Director’, ‘HR Director’, ‘Health and Safety Director’, ‘Development Director’, ‘Purchasing Director’, ‘Communications Director’ and ‘Managing Director’.

For full list of services under each solution and/or membership package, visit http://www.fpb.org/membership or call 0845 612 6266.

Broadcast media – the Forum has ISDN capability and can provide comment, in quality audio, at short notice.

The Forum can also provide journalists with localised and sector-specific case studies.

About the Forum of Private Business

A not-for-profit organisation, the Forum of Private Business provides a personal, friendly and highly tailored service to its members – with the primary purpose of helping them run their businesses more profitably.

Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses. Visit http://www.fpb.org.

The Forum helps owners and managers of small and medium-sized businesses to comply with regulations via its dedicated member helpline, 24-hour legal advice line, and Health and Safety Guide, Employment Guide and Credit Control Guide.

In addition, the Forum’s http://www.smallbusinesschannel.co.uk was launched in June 2009, providing a wealth of free video advice and information on a range of topics to business owners and managers.

The Forum is a proud supporter of the Children’s Cancer and Leukaemia Group (CCLG): http://www.fpb.org/charity

Media contacts

Phil McCabe
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