Confidence high despite slow recovery says new survey

CONFIDENCE among business leaders is running high despite the weak recovery shown by the recent GDP figures, according to a new survey commissioned by accountants RSM Tenon.

Three in five business owners (60%) feel confident about the potential opportunities for their business over the next three months – a rise of 19% from the previous six months.

RSM Tenon’s Business Barometer, which questioned over 300 business owners throughout the UK at the end of January 2010, shows this confidence is translating into investing in their businesses.

According to the survey, around two in five entrepreneurs (34%) plan to expand their business over the next 12 months.  And while 51% do not plan to make any changes, just 6% believe they are likely to cut back the size of their operations.

In the Midlands 43% of entrepreneurs expect demand for their services/goods to increase over the next three months.  This is an increase of 14% from the previous six months.

At the same time, 25% plan to increase in the price of their goods/services over the next three months.  Just 9% think they will be in a position where they have to cut the prices they charge.

RSM Tenon said further evidence of this confidence was supported by a rise in the intention of firms to increase their level of spending over the next three months, compared to the previous six months.

The results suggest:
•    25% of all firms plan to increase staff numbers in the next three months, compared to just 17% previously
•    17% will increase staff salaries, which is the same as last time, while just 2% will cut wages
•    26% expect to increase spending on capital investments (e.g. computer hardware) compared to 19% six months ago
•    23% have no plans to reduce marketing and communications spend

Alan Webb, Director of RSM Tenon in Birmingham, said: “We believe that business leaders have made a key contribution to the fragile recovery we have witnessed to date.

“Their flexibility in adjusting their business model to straightened circumstances, coupled with a grit and determination to succeed, has helped to pull them through one of the UK’s worse recessions.”   

Active investment into businesses remained a key indicator of confidence and the barometer showed planned spending has been steadily growing over the last nine months, he added.   

“This survey suggests a brighter than expected outlook but cost control and tight financial planning remain important in ensuring firms come out of the recession stronger, said Mr Webb.