SMEs wary about economic improvement

Green shoots: 28 per cent of firms expect the business climate to improve this year

Fewer than three in 10 UK small businesses expect the economic climate to improve this year after half saw sales drop in 2009.

The annual Voice of Small Business survey, conducted by the Federation of Small Businesses and ICM Research, reveals 48 per cent of respondents saw revenue decline last year. A slump of more than 10 per cent was endured by 13 per cent of firms, while 14 per cent saw turnover plummet by more than a fifth.

But three in 10 companies managed to grow their top line, with almost half of those posting increases of more than 10 per cent. Sales remained flat for 16 per cent of firms last year.

Profits were down for 52 per cent of smaller businesses in 2009, with one in three respondents reporting double-digit declines. Profitability increased at 27 per cent of firms, with one in 10 growing their bottom line by 10 per cent or more. Profits were flat at 19 per cent of companies.

The business climate will improve this year, claimed 28 per cent of firms. A deterioration is expected by 22 per cent, while 46 per cent believe trading conditions will remain stable.

Firms in Wales and Northern Ireland are particularly downbeat. Just 21 per cent of Welsh respondents expect the business climate to improve this year, while 29 per cent of Northern Irish firms expect conditions to deteriorate.