Business confidence left fragile in uncertain times
ASK any football or rugby coach and they will tell you that confidence is a key element when it comes to success.
When you pit two sides of equal strength against one another it is usually the one that has the most confidence and the most momentum that will triumph. Confidence is a crucial ingredient – one where you only realise it’s importance when it is not present.
It is the same in business. A confident business environment helps companies and sole traders to feel more secure about their future, have greater ambition in terms of launching new products or taking on new staff and generally believe that, despite the prevailing conditions, they will succeed.
And that is why FSB’s quarterly business confidence reports are pored over by those in power as an indication of how small businesses are faring at any one time and whether they are moving forward in a positive way or are stuck in neutral or even reverse gear.
Our latest South West report – as already featured in the Western Daily Press – shows that strangely our businesses are experiencing all these gears at once which sums up the very mixed picture we are hearing from local SMEs about where they are and what they feel about their future prospects.
On the plus side since we last did our report, confidence levels have risen markedly – by 20 percentage points no less. But, when you consider that they were previously at a – 21 score (i.e. there were far more people who were negative about the future than positive) it’s hardly a cause for celebration to say that we are only just below the break-even point.
The reason it was so low last time, incidentally, was because the poll was taken just before Christmas where many of us genuinely believed another lockdown was potentially coming as Omicron descended on all our lives. Different times, different fears.
However, any rise in confidence is always to be welcomed and it wasn’t the only bit of good news in the report; many of our local SMEs were more hopeful about the thought of their growth prospects and far more are considering taking on staff than letting them go. So, all these factors should at least give us some belief that many South West businesses are at least heading, albeit slowly, in the right direction.
The truth is, though, that confidence is a very fragile thing. We know many businesses are worrying now about a number of factors that could affect their bottom line and as a result how they see their future.
The huge rise in costs of practically everything that businesses use and need, ongoing issues with supply chains, the difficulties of recruiting and retaining staff and also the debt mountain many businesses are now facing as they are forced to pay back Covid loans on top of their other outgoings is creating a range of new anxieties. And when businesses worry then the economy should worry too.
Overall it all feels like we are in a sort of no man’s land in confidence terms at the moment as economic and political uncertainty seems to be growing. The only thing we can actually feel certain about at the moment is that no-one seems confident about predicting how our business confidence levels will look by the time of the next FSB report...
■ Sam Holliday is the FSB Development Manager for Gloucestershire, Bristol, Bath and South Gloucestershire.