Small company sales expectations slip to six-year low

Small company sales expectations have slipped to a six-year low according to new research. The "credit crunch" and diminishing consumer confidence seems to have hit small retailers the hardest. Smaller construction firms have also been affected.

The quarterly survey released by the Small Enterprise Research Team, drawing over 800 responses in Q1, takes a closer look at regulation as well as reporting on performance and prospects. More than 90% of respondents doubt that government understands small business well enough to regulate and nearly as many believe there is a lack of joined-up thinking across government departments.

Some 61% of firms report that they are spending more time on regulations and paperwork than this time last year and only one in ten believes that the government consults well with business before introducing or changing regulations. On average, small firms spend 5.4 hours per person per month on regulation compliance but the many self-employed who work alone spend nearly double (9.7 hours).

Graham Ball, a partner in Castleberg Sports, sports and outdoor pursuit’s retailers in Settle, North Yorkshire comments: "In a small, family-run retail business like Caslteberg Sports the hours are inevitably long. Once you've shut shop you have all the back-office jobs to attend to but you accept that as part and parcel of being your own boss. When times are good, and you can perhaps take on an extra member of staff, this situation is eased, but in tough trading conditions, as at present, you sometimes wonder if the diminishing returns are worth all the effort. Whilst accepting that regulation is necessary, it is then particularly that you may feel a trifle frustrated about the time and other resources used up in compliance. Take VAT, for example; as tax collectors we are not merely unpaid, we have to pay our accountant for the privilege of so being."

This quarterly edition of the survey draws on data supplied by Barclays Bank which indicates that the rate of small business formation has turned downwards. Combined with inflationary pressures and a cautious attitude to taking on new staff, it is quite apparent that Britain’s smaller firms are feeling significant trading pressures.

Professor Colin Gray, Chair of SERTeam Trustees said:

“We are seeing a noticeable slide in the economy which is not surprising given the increased rate of business closures recorded in 2006 and into 2007. Worsening economic conditions appear to have fed through into a slowdown in the rate of new business starts and the only sectors expressing any optimism are agriculture and services where output and prices remain relatively strong.”