Despite the uncertain political outlook and expectation that the recession will last into next year, Financial Mail’s exclusive survey of small businesses reveals there is still optimism for the future.
The survey of 700 small businesses by the Shell LiveWIRE network – a group of young entrepreneurs – shows that a third expect to hire staff this year and 66 per cent of companies surveyed expect their business to grow.
Though ten per cent of those surveyed admitted the recession had cut demand and reduced turnover, few thought this downward trend would continue.
The optimism of the small business sector will be a comfort to the new Government, which is expected to have to focus largely on spending cuts rather than encouraging growth.
James Smith, chairman of Shell UK, says: ‘This confirms the contribution that small businesses can make to the economy. Two-thirds of jobs are in small businesses and small business has a huge role to play in getting the economy going again.
‘Small business owners tend to have a lot of business creativity and self-belief.’
When asked how the recession had affected their businesses, 28 per cent said it had inspired them to refocus on their vision for the business while a quarter said it had challenged them to identify new areas of growth.
Respondents were asked what key measures they would like to see from the new Government to help small businesses and entrepreneurs. Funding was the most frequently mentioned and was also regarded as the major hurdle to setting up a company.
Other problem areas included tax and National Insurance, red tape and regulation, lack of quality advice and information and overheads such as staff and premises as well as problems recruiting skilled staff on affordable salaries.
Gregor Mackintosh, 22, founder of rapeseed oil firm Mackintosh of Glendaveny in Aberdeenshire, says support to create employment opportunities such as grant aid is a key area the Government should look at.
After graduating from agricultural college, Gregor went straight into developing his business and in March last year Mackintosh of Glendaveny made it on to the shelves of Scottish butcher’s, farm shops and delicatessens.
Thirteen months later, Gregor supplies his oil to 15 Asda stores around Scotland with the aim to supply all its supermarkets north of the border in the near future.
He says: ‘I have three part-time employees and now I would like to take on extra help now.
‘We are rapidly growing into supermarket supply and the output is there, but it is a risk taking people on. There is also a lot of legislation involved in this country compared with elsewhere.’
Despite the recession, his business has fared well, but Gregor faced challenges when starting up, mainly due to a lack of funding. He says the Government must focus on supporting new businesses and encourage growth through increased availability of funds.
Joshua Mason-Allen, 20, founder of LROPS Flight Simulation Ltd, based in Warwick, says: ‘The economy is largely service and we need to continue on that basis. We can’t compete on a manufacturing basis. We need to realise we are in a digital age and we need to capitalise on that.’
He says one of the main hindrances to setting up a business in the UK is a ‘lack of confidence’ and adds: ‘Finding out about things like tax issues can be quite daunting.’
When asked to rate their optimism that the new government will put small business at the heart of its economic agenda (with 1 being not at all optimistic and 5 being very optimistic), 38 per cent selected ‘3’, suggesting that entrepreneurs feel unsure about how much support the next government will offer them.
Adam Marshall, director of policy at the British Chambers of Commerce, says: ‘Companies have expressed significant concerns about how a hung Parliament could affect the decisive action needed to cut the deficit and improve the business environment.
‘The electorate has spoken and the result is a hung Parliament. But the business community has also spoken and it expects the parties to put political horse-trading to one side and put the economy at the heart of their thinking.
‘Strong leadership and consensus are required to deal with the serious threats still facing the economy.’
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