The latest research by the Federation of Small Businesses (FSB) demonstrates a second successive quarterly sharp decline in confidence amongst small businesses in the North West region.
The quarterly Small Business Index (SBI) – which measures business confidence – demonstrates clearly the negative sentiment felt by business owners across the region, falling from -27%% in Q2 of 2022 to -37% in Q3. In the first quarter of 2022 (Q1) confidence was at +4%.
With the exception of a dramatic decline throughout the pandemic, the new figures show business confidence in the region is at its lowest since the quarterly survey began.
The challenging economic environment against a backdrop of surging operating costs, a high tax burden, and a significant labour shortage is devastating the small business community, threatening the futures of hundreds of thousands of small firms and sole traders.
Other key headlines from the report are:
A greater number of small businesses are reducing staffing levels than are increasing them, which is indicative of trying to deal with falling revenues and looking to reduce overheads.
Half of small businesses in the North West are now reporting falling revenues. Just 27% report increasing sales receipts over the last three months.
Businesses are pulling back on investment plans as they seek to shore up their balance sheets. The lack of confidence is feeding through into diminished growth ambitions.
62% of small businesses cite the general economic climate as their greatest concern at present. This would indicate that inflation and reduced consumer spending are now really biting.
27% of small firms see utility costs as the greatest concern.
Despite reduced demand for labour, 25% state that appropriately skilled staff is their greatest business headache at present.
Paul Wareham, North West England Policy Representative, commented:
“Our latest findings from the small business community across the North West of England lay bare the challenges which many small businesses are facing, and there is very little optimism out there. Costs are continuing to rise and sales are falling as customers are now reluctant to spend on non-essential items.
“Energy costs are still a concern and many small firms are trying to work out what their bills are likely to look like through the winter.
“In normal times a business with rising costs would need to increase its prices to maintain profitability. That’s easier said than done at the moment because customers are typically looking to pay less, so businesses are being squeezed on both sides.
“FSB wants to see the new Prime Minister deliver stability to the economy. Ensuring that businesses are supported with unaffordable energy bills, and reducing the cost of employing people through lower National Insurance payments must be a central foundation of helping small businesses to survive the next few months and then look to the future with more optimism as we move into 2023.”
