Confidence returns to the region

DIVERSIFICATION is key to surviving the recession, according to a new survey.

The latest National Business Survey, which was commissioned by regional development agency Yorkshire Forward, also found that 71% of Yorkshire companies now feel well-placed to weather the recession in the next 12 months.

The survey highlighted the importance of firms diversifying their products and entering new markets in the current climate with a rise in the number of firms who have introduced new products or processes in the past year from 24% to 34%.

The region’s firms gave encouraging responses despite the ongoing downturn with around half (51%) saying they intended to diversity by pursuing new markets and that more firms intended to increase investment in sales and marketing over the next 12 months.

Firms who feel optimistic about their future are more likely to invest in their business with more than a third (38%) of those surveyed expecting to invest an increasing amount in their business over the coming months.

In line with national trends, businesses in the Yorkshire have had a tough year with more than half (55%) reporting that their business performance has deteriorated over the past year.

While all sectors have suffered during these challenging time the survey highlights that the worst hit companies have been those in construction and the regions smaller businesses (those with less than 10 employees) – who are finding it harder to cope with the recession compared to larger firms.

However, the proportion of businesses expecting the business climate to improve in the next 12 months has increased from 8% in Autumn 2008 to 20% in Spring 2009.

Firms in the finance and business services and public and personal services sectors are most optimistic about the future overall.

The report found output levels fell sharply in 2008 but that the rate of contraction is anticipated to ease considerably in the next year.

Order levels have also fallen sharply in the previous year (29%) but businesses surveyed expect this to improve over the next 12 months.

Recruitment activity is set to improve following a fall of 23% in employment levels in the past year.

Patrick Bowes, chief economist at Yorkshire Forward, said: “Recognising the difficult challenges that businesses in Yorkshire have faced over the past year in the domestic trading environment, it is encouraging that businesses in the region have responded to the challenge of the recession by diversifying their markets and developing new products.

“Yorkshire Forward and Business Link have worked to deliver business support on the ground and ensure this support helps our region’s businesses bottom line and we will continue to work hard with businesses to support them in this change, by increasing the resources available to companies in the region.”

The research also showed that demand for Business Link serivces has increased significantly and that its customers are more positive on balance than the overall business community in Yorkshire.

Almost all those businesses surveyed were aware of Business Link (92%). Nearly half (48%) of businesses had used Business Link in Spring 2009 compared to 38% in Autumn 2008 with three in 10 businesses intending to use Business Link in the next 12 months.