LONDON, October 26, 2015 /PRNewswire/ --
- Overall, SME confidence falls over six months
- Major confidence swings across key industry sectors
- Highly confident businesses prioritise different milestones to all other businesses
The number of small business owners with a positive outlook has fallen over the last six months - and in some industry sectors by as much as 20% - according to new research from Aon Risk Solutions.
The preliminary findings from Aon's Small Business Change Index tracks business leader outlook and attitudes to risk every six months. The last cycle of research in March 2015 - ahead of the Scottish referendum and the pending General Election - was a period of uncertainty for many SMEs. Six months on, rather than seeing signs of more broad-based economic confidence, the proportion of SMEs with a positive business outlook for the next six months has fallen from 50% to 48%. The proportion anticipating difficult times ahead has risen from 9% to 11% and those anticipating no change stays at 39% for the period.
Looking within specific industry sectors, swings in confidence were significantly more marked. IT was the only sector surveyed where there was a net increase in the number of businesses with a positive outlook for the next six months. Sharp falls were reported in media, finance, accounting and construction. Retail replaced media as the sector where most SME decision makers were confident - although even here confidence was down from 55% to 49%.
SME outlook for the next six months: A comparison between March 2015 and September 2015.
March 2015 September 2015 Significant expansion 7% 6% Modest growth 43% 42% No change 39% 39% Contract/scale down 5% 7% Struggle to survive 4% 4%
Proportion of SMEs predicting net growth or contraction: Results by sector
September 2015 (reported first) Vs. March 2015 (reported second)
Net growth No change Net contract Sept '15 Vs. Sept '15 Vs. Sept '15 Vs. March '15 March '15 March '15 National Average 40% Vs. 50% 42% Vs. 43% 11% Vs. 9% Retail 49% Vs. 55% 35% Vs. 38% 14% Vs. 6% Media 48% Vs. 62% 37% Vs. 31% 13% Vs. 7% Finance & Accounting 47% Vs. 59% 39% Vs. 33% 12% Vs. 5% IT 45% Vs. 42% 43% Vs. 48% 7% Vs. 8% Manufacturing 44% Vs. 54% 47% Vs. 37% 8% Vs. 8% Hospitality N/A Vs. 43% N/A Vs. 38% N/A Vs. 15% Construction 39% Vs. 50% 44% Vs. 33% 15% Vs. 16%
Which factors correlated with a positive business outlook?
- Size matters: Larger SMEs were significantly more likely than their smaller counterparts to have a confident outlook for the next six months (65% Vs. 38%), although these larger enterprises were also more likely to expect modest growth over significant expansion in the months ahead.
- London and Manchester top growth incubators: Regionally, small businesses in London, the north west and the south east were most likely to have a confident outlook, whereas those in the south west, Wales and Scotland had the fewest businesses with a confident outlook.
- Business age also emerged as a significant factor - younger and long established businesses had highest levels of confidence - whereas those in the middle were more likely to predict no change or just modest growth.
The Aon research also asked business owners to give reasons for their outlook and the findings indicated that businesses that were bullish about growth prospects placed importance on a different set of success factors than the national average or specifically those that predicted just modest growth.
Top reasons behind business outlook for the next six months
Those that predicted Those that predicted UK average modest growth significant growth 1. Launching new 1. Retaining existing 1. Retaining existing products and services customers - 54% customers - 54% - 37% 2. Expand into new 2. Effectively 2. Effectively markets /audience managing costs - 34% managing costs - 36% segments - 36% 3. Focus on core 3. Focus on core products and services products and services 3. Retaining existing - 31% - 35% customers 33%
Chris Lee-Smith, Managing Director, Aon Risk Solutions Affinity Commented: "When we commissioned this research last spring ahead of the General Election, almost one in four UK businesses identified political uncertainty as a very real risk to overcome in the next 12 months. Six months on, it is a surprise to see that SME business leader confidence is at best static, with some significant swings of opinion prevalent in a number of key industry sectors. Businesses that embrace change and are looking to open new markets are most likely to be very confident, whereas confidence is notably more muted among those businesses that are placing most emphasis on maintaining their current position. An over-arching concern, whether bullish or muted in outlook, the vast majority of business leaders are placing scant emphasis on practical risks close to home. For example, less than one in 30 business leaders placed importance on the digital security of their business, relative to other factors - something we will explore further with our next stage of research."
Notes to editors
The research was conducted by YouGov among 1,042 SME decision makers between 14-22 September 2015 and 12-19 March 2015. The survey was carried out online.
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SOURCE Aon Risk Solutions