The Small Business Index (SBI) is a report published every quarter by the National Federation of Self Employed & Small Businesses (or FSB, for short). Based on a survey of just under 1000 small businesses, it analyses their confidence in the UK economy.
The SBI drops for a fourth time in a row
The latest confidence rating, published for Q2 of 2019, shows that the current scoring is 22 points lower than it was for this time last year, at -8.8. It is the fourth consecutive negative reading, and the most sustained slump since the Index was launched in 2010.
In real terms, it means that the number of business owners who lack confidence in the UK business environment is greater than the number of owners who are confident.
What do small businesses predict for the future?
68% of small businesses don’t expect the situation to improve for them over the next quarter either. Only 45% of those surveyed expect to grow their business in the next year, which is a record low.
This lack of confidence is not surprising when a record 42% of small firms reported that their profits had dropped in this quarter. 34% of exporters said international sales had dropped-off.
Business stability in an uncertain environment
Business costs continue to be a major factor in dropping profits and reduced growth. For most people, the cost of running a business is increasing, with labour costs being a considerable part of this. It has seen businesses grow their staff headcount more slowly than the demand requires. It might mean extra stress for existing staff, but also avoids committing to staffing resources at a time of uncertainty.
34% of those surveyed feel that it is the cost of compliance with regulations which is causing the strain. FSB national chairman Mike Cherry said that small business owners are being “hit on all sides” by new costs and reporting requirements, plus political uncertainty and “the re-emerging threat of a cliff-edge no-deal Brexit.”
The following advice could apply to any point of a business life cycle, but particularly as a way to maintain stability.
Be rigorous about managing cash flow
This allows you to constantly monitor availability of funds, so you can carry out credit control or ensure you’re not overspending.
Review your procurement process
As part of procurement, it’s always worth performing regular reviews of your suppliers. Quality or availability of niche items are always going to be a consideration, but try not to overlook new suppliers or price changes and special offers available elsewhere. Utility and insurance providers should be included in this, to make sure you always get the best deal.
Use freelancers where appropriate
If you have identified a long term need for staff then recruitment of a staff member makes sense. Projects or ad hoc work might be better put out to a freelancer who can carry out the work without the long term commitment.
Monitor your branding
The ethos and purpose of a business might change over time, but the way this should be communicated could. Trends in the industry or consumer shopping habits are prone to fluctuation, so regular reviews will help your business stay in the spotlight for the right reasons.
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A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.