With an election due this year, 78 per cent of companies think a Conservative government would be more supportive of entrepreneurial businesses, according to a review by Bowmark Capital.
Respondents say keeping interest rates low, simplifying employment law and cutting red tape should be priorities for the next government.
Respondents are considerably more upbeat after their mood hit a gloomy nadir 18 months ago. The Optimism Index, which tracks how positive respondents are about their own businesses, rebounded 6.4 points to 73.1 from July 2008, but there were dramatic disparities between the sectors reviewed in terms of their past performance, future expectations and access to funding.
The bosses of small and medium-sized businesses want a break – and specific help – from the next government. Nearly two-thirds (63 per cent) of companies are calling for continuing low interest rates and simplified employment law as top priorities post election, just behind the 73 per cent who want red tape cut.
Nearly half (47 per cent) of respondents reported lower or unchanged revenue. Just 13 per cent had that experience in July 2008. Similarly, 42 per cent this time said profits were static or had fallen compared to 26 per cent in the last survey. Jobs took the hardest hit – two-thirds of respondents said their staffing levels were the same or lower than a year ago. Just 29 per cent were in that position in the previous survey.
Healthcare companies proved more resilient than most sectors surveyed, with 37 per cent reporting 20 per cent+ profits in the past 12 months and 27 per cent anticipating that level of increase in the year ahead. Nearly three-quarters of healthcare respondents expect the government to outsource more services to the private sector to increase efficiency and cut costs as it struggles with budgetary pressures.
Areas healthcare companies think are ripe for public sector cutbacks include drug research and development and new treatments (33 per cent), care for the elderly (30 per cent) and acute care and hospitals (27 per cent). None expect lower spending on children’s care.
The survey revealed dramatic variations in performance between the sectors with manufacturers being hardest pressed. Manufacturers’ confidence about their own businesses continued to deteriorate for the third time; two-thirds reported static or lower profits in the past 12 months; 81 per cent said staffing levels had decreased or were unchanged and a quarter were having problems servicing their debt. But 71 per cent expect the economy to show sustained recovery this year.
In spite of the government’s injunction to the banking sector to support business customers, 39 per cent of respondents reported that access to acquisition finance had worsened in the past six months. Some 44 per cent said that the terms offered for working capital facilities had tightened over that period with nearly two-thirds of manufacturers in this position.
Despite their recent experience, most respondents think that better times lie ahead for their own businesses as well as for the economy. Some 89 per cent expect revenue and profits to grow in the next 12 months, though a third are not so positive about employment, expecting job numbers to plateau or fall in the year ahead.
Bowmark Capital’s managing partner Charles Ind says: “The small and medium-sized companies we surveyed have been through the wars in the past 18 months, with some sectors worse affected than others by the recession. While, historically, it can take up to three years for activity to return to pre-trough levels, the entrepreneurs in our survey are more optimistic about a faster return to growth for the economy and for their own businesses.”
