As the economic recovery takes hold for most of the UK, small businesses, although largely optimistic overall, are still remaining quietly cautious about the future.
Overall levels of optimism among SMEs (small and medium enterprises) have remained steady at 82%, according to a survey carried out by AXA Business Insurance. However when it comes to expected growth this year, optimism levels are down 9% on a year ago and there has been a 40% drop in SMEs planning to take on new employees in 2014.
Whether overall optimism abounds is dependent on the type of business, with it slightly lower when it comes to the retail and distribution sector at 79% and highest amongst businesses offering personal services, such as cleaning, hairdressing and dog walking, at 89%.
Retail businesses also showed a big drop in growth expectations as 71% were optimistic of growth last year, whereas only 58% are today. Only the construction/industrial companies are looking more confident about growth this year, up 9% to 57% overall, perhaps down to the increase in house building in the UK.
The potential rise in interest rates is the main reason cited by SMEs for reduced optimism, with it being of particular concern for the construction/industrial business sector with 41% stating this as a worry. However the economic situation in the eurozone as a whole seems to be less of an issue with a quarter seeing this as a dampener to their optimism, down from a third a year ago.
Darrell Sansom, managing director at AXA Business Insurance, says: "It's good to see that, overall, optimism remains high; but we can't ignore the drop in growth expectations. It could simply be that there was a dramatic surge of optimism last year as the economy started to pick up and that this has now settled to more realistic levels.
"But we also know from working closely with SMEs that things like difficulties in securing funding and invoicing terms from clients are holding many back from more ambitious plans for the future.
"Whatever the reasons, we want to see the UK's SMEs – who are such powerful drivers of our economic recovery – make the most of our improving economic climate. Ensuring they have the protection they need to keep going through the good times and the bad is just a little thing that we can do to help."
Having a good business account and wisely investing profits will ensure you have enough to get your business through the rough as well as the smooth, so take a look at some of the accounts available to help keep your business thriving.
Keeping small businesses financially healthy is important for the economic recovery of the country as a whole, and if you plan ahead, ensuring you have a safety net in place, then hopefully optimism levels within the small business sector will be soaring again.
Take a look at our business finance guides
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