A recent report suggests that smaller (micro) businesses are more likely to succeed during tough economic times.
The study, released by online accountancy service FreeAgent Central this week, is built on the common experiences of small businesses and freelancers during the downturn.
The report suggests that working in and with micro businesses is a sensible and profitable thing to do during times of economic instability, while new businesses are also succeeding with companies set up in the last year doing far better than their older counterparts.
Small business optimism returning?
The detailed findings show 36% of small businesses were very optimistic about the future with better anticipated earnings, compared to less than 10% of contractors.
Working with other smaller businesses is also more profitable as nearly half the respondents who have large companies as clients (those with more than 500 employees) thought their earnings would go down this year, compared to fewer than a third who don’t work with those kinds of clients.
Put alongside companies up to and beyond 10 years old, businesses set up less than a year ago have been impacted least by the credit crunch, the best anticipated earnings and are the most optimistic for the future. On the whole, despite the negative financial climate, two-thirds of contributors reported that their business income has either stayed the same, slowed a little or in some instances has even increased.
Looking at sector specific results, 60% of respondents in Graphic or Web Design thought that business this year would be the same or stronger than last year compared to only a third of those in IT/Business Consultancy, Journalism or Finance/Accounting.
Ed Molyneux, CEO of FreeAgent Central says: “Smaller businesses are the engine room of the economy and these results are very reassuring. If these new businesses are optimistic and doing good business, this should have a great impact on our overall economy.”
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