Sole traders, are your confidence levels still up?

Tuesday 11 March 2014

Sole traders in the UK have seen conditions improve considerably over the last year and the skills shortage means highly-trained professionals are in great demand. But is this translating into sustainable business confidence?

Figures from the Federation of Small Businesses (FSB) suggest the answer is likely to be yes.

Confidence increased to 35.7, surpassing the previous record score of 33.5 in the third quarter of 2013.

What's more, nearly two thirds of small companies expect to grow over the coming year, while one in four intend to increase the amount they reinvest in their business.

According to the Small Business Index, exports are back on the agenda too, with 25 per cent of operators expecting to see a rise in export activity over the quarter. Already ten per cent have reported growth in this area since the final quarter of 2013.

This is all set to result in improved profitability and turnover and more businesses now expect these areas to strengthen over the coming three months.

Meanwhile, more and more companies are looking to create jobs over the quarter, indicating further the return to confidence.

The FSB claims the fact that this has now continued for three consecutive quarters is a sign that the momentum of economic growth is being maintained.

Indeed, 15 per cent of the 3,000 businesses surveyed claim they want to take on more people over the quarter, while 11 per cent have grown their headcount over the previous three months.

This has been a trend noted particularly strongly in the West Midlands and east of England, which both have above average increases of 14 per cent.

John Allan, national chairman of the FSB, said: "Once again we see confidence on the up – and small firms leading the way in job creation.  There is no doubt small businesses are pushing us further towards economic prosperity and it's so important to retain this momentum. That more than half of firms want to grow is a sign to the Chancellor to keep the focus on business."

He added that small companies are able to play an even greater role in the economy, including helping long-term unemployed youngsters get back into the jobs market.

"With more businesses planning to invest, this can only be good news for the economy and the Chancellor needs to build on this in the Budget," Mr Alan concluded.

There is even confidence that the lending environment won't be able to hold businesses back, with the FSB report showing improved access to finance for a larger number of firms. The body claims that while conditions are still a challenge, banks and building societies are becoming more willing to lend.

This isn't, however, filtering through to the perceptions small businesses and sole traders have of the lending environment. Indeed, there is still a belief credit availability and affordability are weak.

Consequently, according to the FSB, more now needs to be done to improve confidence in lending institutions.

This may be one element that George Osborne will focus on in the upcoming Budget and the the FSB claims reforms to banking should be a key feature.

By Victoria McDonnell

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