Small firms eye 2013 sales growth despite Britain’s economic woes

For many small businesses, getting trained employees with the correct skills is a major headache. Picture: Julie Bull
For many small businesses, getting trained employees with the correct skills is a major headache. Picture: Julie Bull
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Almost half of the UK’s smaller businesses are looking forward to sales growth in 2013 despite meagre prospects for the economy.

A survey of small to medium-sized enterprises (SMEs) by the Co-operative Bank found only one in five fears sales and orders will fall.

Keith Alderson, managing director of corporate and business banking at the Co-op, said: “SMEs and entrepreneurs are widely acknowledged as vital to Britain’s economic recovery, so these results are good news as we head into 2013.

“As the curtain closes on another tough year, it seems many SMEs are now looking forward with a cautious sense of optimism about the challenges for their businesses next year.

“We see this entrepreneurial spirit day-in, day-out in our dealings with customers and I’m not surprised that SMEs are adapting and exploring new markets to overcome the economic challenges.”

The poll of more than 500 business found that 43 per cent believe their sales and orders will rise next year, while one in four plan to expand their workforce.

Asked about the challenges facing their business in 2013, 73 per cent said uncertainty in the economy was by far and away the biggest challenge.

Although the UK returned to economic growth in the summer, survey evidence shows the recovery has since stalled, and many economists are now predicting a “triple dip” recession in the current or next quarter.

Even the relatively-optimistic official forecast from the Office of Budget Responsibility predicts growth of just 1.2 per cent in 2013.

The Co-op’s survey found the issue of support from banks has not gone away, with 19 per cent seeing it as a worry.

But rising energy costs were regarded as the next main issue for 41 per cent of SMEs, followed by cashflow. Skills shortage was an issue for 22 per cent.

Earlier this week, the Federation of Small Businesses (FSB) in Scotland used its Christmas message to members to call for a number of measures that it said would boost SMEs and create jobs if implemented next year.

The FSB also raised the issue of energy prices, calling on regulator Ofgem to free the smallest companies from onerous long-term contracts. It said energy companies’ practice of automatic contract rollovers locked many small businesses into long-term contracts they cannot afford.

Almost three-quarters of Scottish FSB members saw the cost of running their business rise during the last quarter of 2012 – with fuel and energy bills disproportionately hitting businesses north of the Border.

Other measures the FSB thinks would boost small firms and the wider economy include tailored advice for those hiring their first staff and help moving from “spare rooms and garages” to commercial premises in town centres.

The FSB said Holyrood’s Better Regulation Bill, set to be unveiled in 2013, is a real opportunity for Scotland to become a model of consistency.

The body urged larger companies sitting on cash to use the ten-fold rise in investment allowance unveiled in the Chancellor’s autumn statement to “boost confidence by investing for the recovery”.