FSB Report Suggests that Small Business Confidence Fell in July and August

It is only just over 3 months since the Brexit vote and it is still too early to forecast with any accuracy what will happen once article 50 is invoked and formal negotiations to leave the EU start in March 2017. We are seeing mixed messages about the state of the economy, and more specifically the state of business in the UK following the referendum.

For example, some of the figures for Gross Domestic Product and employment have been stronger than expected, however, with the IMF suggesting that the UK will now be the fastest growing G7 economy this year. By contrast, the Federation of Small Business’s recent survey finds that confidence levels amongst small and medium sizes businesses has turned negative for the first time in four years.

This article looks in a little more detail about the FSB’s survey, and gives a flavour of what we at Poppleton & Appleby are seeing and how we can help businesses that are struggling.

The FSB’s survey says SME confidence is falling

The FSB surveyed 1,035 small and medium sized businesses between July and August 2016, asking them how confident they felt about the future growth prospects for their business. The results showed that the index was negative for the first time since 2012, meaning that more businesses were pessimistic than optimistic. Moreover, it was the third quarter in a row that the index had fallen as well as being the second largest fall in the history of the index.

However, alongside this depressing result, the FSB went on to say that there were “many positive signs” that small and medium businesses were actually proving to be more resilient than expected during the post Brexit period of uncertainty. These positive signs included: 55% of small companies were aspiring to grow over 2016, whilst the number of firms expecting to “downsize, close or hand on the business fell to 11%.”

What does this mean?

Like quite a lot of post referendum data, the FSB’s survey is both gloomy and optimistic at the same time, which broadly correlates with what we are seeing. One thing that we are seeing, however, is an increase in Business Shut Downs and, perhaps significantly, a reticence amongst company directors wanting to buy businesses back out of insolvency and start again.

It’s certainly the case that we haven’t seen the scale of economic and business problems that the media and other sources were predicting post referendum, but we have noticed some negative effects, particularly a lack of confidence in the future.

How we can help

In our experience, individual businesses encounter difficulties all the time, when the overall state of the economy is positive as well as when it isn’t. Clearly there are more problems in recessionary periods, but it’s all down to the specific business. Problems might be caused by number of factors, for example: increased regulatory pressure; a fall in orders due to increased competition; a fall in exports due to a strong £; a rise in the cost of imports due to a weak £; a lack of investment.

Whatever the cause of a business’s problems, they can very quickly lead to HMRC Arrears, creditor pressure, cash flow problems, and difficulties raising funding and finance to help a business grow.

At Poppleton & Appleby, we’re not just here for the insolvencies and winding-ups. We’re also here to help businesses recognise and identify the problems as soon as possible and tackle them early and head on with a focussed recovery plan. And that’s regardless of the economic conditions.

If your business is struggling, the sooner you contact us or call us on 0333 222 8065, the quicker we can talk and the more likely it is we can help.