The results of the Business Health Index show small, but positive improvements for Small and Medium Enterprise. An increase from0.35 in April to 0.46 in October this year indicates an air of optimism for UK business owners. Data from the Office for National Statistics shows an increase of 0.5 percent in GDP during the quarter ending September 2011. However, more needs to be done for UK SMEs, as a profit was shown by just 27 percent of businesses surveyed.
A fifth of the 417 respondents consider a cut in Corporation Tax the most effective measure which could be implemented by the government. The Business Health Index uses a number of factors to determine business health, including levels of bad debt, arrears of tax, profit and turnover. The index level for invoice finance users increased significantly from 0.62 to 2.24 in October 2011.
Recruitment has shown a slight improvement, with 32 percent taking on new staff during the last six months. Businesses making workforce reductions has reduced by four percent, down to 27 percent. However, although the data shows real positivity for many SMEs, only 27 percent of businesses surveyed increased profits during the months April to October. Levels of bad debt are causing problems for 38 percent of respondents, while 77 percent report increasing operational costs.
The biggest concern for 38 percent of respondents is the creation of new business, and managing cash flow in a difficult economy is a concern for 17 percent. The results of the Business Health Index and increasing recruitment levels are positive indications for SMEs, although caution is still being used by many.
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