Small business survey reveals sectoral and regional growth disparity

The biggest quarterly report of UK small to medium-sized enterprises (SMEs) has revealed a striking variation in expectations of sales growth in 2005.

The Small Business Research Trust (SBRT) Quarterly Survey Report, written by the University of Liverpool Management School (ULMS), and sponsored by HSBC Bank, was conducted between December 2004 and January 2005 and surveyed more than 7,000 firms. It shows that SMEs in the hotel, restaurant, wholesale, retail and agriculture sectors least expected sales growth in 2005. The finance, education, health and real estate sectors, on the other hand, were most confident of growth. The regions most confident of growth this year were East Midlands, Eastern and Yorkshire & Humberside. SMEs in Scotland, London and West Midlands were least confident of increased sales turnover in 2005.

Commenting on the survey, SBRT Chairman, Brian Wolfe, said:

“Although business leaders remain optimistic, this doesn’t tell the full story. If you examine expectations of sales growth and actual performance, there is a marked difference between sectors and different regions. Notably the swing in confidence away from the South East and Scotland. Additionally of concern is the poor performance of the manufacturing sector, which is critical to the UK economy. It is vital that all political parties focus and offer solutions that cold arrest this decline.

“The importance of SMEs to the UK economy is still undervalued, despite their huge contribution to the GB Ltd. This was reflected in the recent general election, where SMEs hardly featured in any of the major parties’ election campaigns. The needs and problems of smaller businesses are different to those of their larger counterparts. Our message to SMEs would be to take heed of the barriers to growth revealed by this report – namely tax, employment regulations and business rates, and act either to minimise their effect or press government to accelerate changes, we believe, are already envisaged in the pipeline. ”

Simon Wainwright, Head of Small Business at HSBC Bank, which sponsors the Report, said:

"Varying expectations and performance within the SME sector demonstrate that it's critical for business owners to work with advisers that not only understand their market, but can act quickly when it comes to major opportunities or challenges.

"HSBC Bank's policy is to locate senior bankers locally, giving them the authority to make major lending decisions without referring to head office. In fact, because of this approach, nine out of ten of our lending decisions are made locally. The strength of our local bases gives us a solid understanding of the unique needs of our customers right across the country. By sponsoring this report, we can build on this to further refine our offering to the SME sector, and to help our customers achieve the success they deserve."

University of Liverpool Vice-Chancellor, Professor Drummond Bone, said the University is proud to be the author of such an important series of surveys.

“The growth and health of smaller businesses is vital to the UK economy,’ he said. “Universities should have a much larger part in that growth than they have had in the past. This partnership is just one way we can help remedy that. We very much hope this market intelligence helps provide the right environment in which smaller businesses can flourish.”