Small businesses 'confident about future'

UK small businesses are increasing their sales, employing more people and are confident about the future according to the largest survey of small businesses ever undertaken.

The study Lifting the Barriers to Growth in UK Small Businesses, by the Federation of Small Businesses (FSB) received over 18,000 responses, five times as high as the Government's own Omnibus Surveys of small business opinion, and ten times greater than the samples used by universities, banks and other business organisations.

The survey reports that overall the picture is of a healthy and confident small business sector benefiting from a growing economy. A quarter of respondents have started their business within the previous three years. These new business owners are likely to be young, female and operate their business from home.

It says small businesses have a deserved reputation as the job creators of the UK economy. The survey reveals that in total FSB members employ 1.25 million people. Forty three per cent of entrepreneurs report an increase in employment since 2002 compared to 16 per cent that report a decline.

It also claims that looking to the future, entrepreneurs are an ambitious bunch. Over half are aiming for moderate or rapid growth over the next two years compared to just five per cent who want to down-size or close their doors. Fifty seven per cent report increases in sales volume in the previous financial year and nearly half report an increase in profitability.

But businesses continue to report that they are struggling with red tape. Business owners overwhelmingly state that they are unwilling to lose the UK's opt out from the 48 hour week, but that they are prepared to consider moves to a more flexible retirement age.

The survey also examines a huge range of business issues.

Amongst the findings are that small business owners have not been immune from the explosion in credit card debt. Since 2000 there has been a shift away from bank loans and overdrafts, but entrepreneurs are wedded to their plastic with a quarter of owners using credit cards to finance their business.

Better news is that a surprisingly high number of small firms are now shopping around for the best bank account. Around 15 per cent of firms have switched banks over the past two years, mostly attracted by lower charges.

FSB Policy Chairman John Walker said: "Entrepreneurs have large expansion plans, positive forecasts and big ambitions but they are still critical of the cumulative impact of red tape. Collectively this snapshot demonstrates the strength and confidence of the small business sector."