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 The Small Firms Association (SFA) has released the findings of its Autumn Business Sentiment Survey. Commenting on the figures, SFA Acting Director, Avine McNally stated, “sentiment levels for the current business environment have improved in this quarter and markedly so when compared to this time last year, however, confidence is weak among owner-managers and there are still challenges which they face.”
The survey was conducted during September and a total of 636 companies employing 13,750 people responded. The sample was drawn from manufacturing, distribution, retail and services sectors and was a regionally representative sample.
Overall Business Environment
The results show that 50% of respondents rate the OVERALL BUSINESS ENVIRONMENT currently as ‘poor’ or ‘very poor’, a drop of 9% on Q2 2010, and a drop of 17% when compared to 12 months ago. Some 19% of respondent companies rate the overall business environment to be either ‘very good’ or ‘good’, an increase of 6% on the previous quarter and a 12% increase on Quarter 3 of 2009. Almost three in ten companies (29%) expect their business to be ‘very good’ or ‘good’ in three months time an increase of 10% at this point last year.
All SECTORS show positive movement regarding the current business climate, some 56% of distribution companies rated the overall business environment in Ireland currently as either ‘poor’ or ‘very poor’ (70% in Q2 2010); higher than respondents from the manufacturing sector (44%) and services sector (50%). The proportion of respondents that rate the overall business environment as either ‘very good’ or ‘good’ varies between the services (17%), manufacturing (26%) and the distribution sector, which are less positive at 13%.
Own Business Environment
More than three in ten companies (31%) rate their OWN BUSINESS currently as “very good” or “good”, an increase of 5% on the previous quarter. Over a third of respondents (33%) rate it currently as “poor” or “very poor” a decrease of 8% on the previous quarter and a decrease of 20% on this time last year.
Sentiment and confidence is weaker when respondents focus on their OWN BUSINESS, almost three in ten respondents (29%) are ‘less confident’ in their own business, a slight increase of 5% on the last quarter. While 19% of companies indicated they were ‘more confident’ about their own business, this is a fall of 2% on Q2 2010, but an increase of 3% on this time last year.
In relation to assessment of their business on a SECTORAL BASIS, just over a third (37%) of companies from the manufacturing sector rate their own business currently as either “very good” or “good”, slightly higher than services (33%) and significantly higher that 21% of distribution companies.
When compared over the 12 month period companies are indicating a more positive outlook for the forthcoming months. 29% expect their own business in the next three months to be ‘very good’ or ‘good’ compared to 19% at the corresponding point last year. The proportion of companies rating their own business as either ‘poor’ or ‘very poor’ (31%) has reduced significantly compared with this time last year (48%).
Access to CREDIT continues to be challenging, with the cost of working capital having increased for 21% of respondent companies in the last three months and the cost of investment finance having increased for 13% of respondent companies. 18% of companies have seen the availability of working capital decrease in the last three months, with some 13% indicating that investment finance availability has decreased.
McNally said, “this survey shows that small business sentiment has improved, however their confidence remains weak and will remain so until greater clarity and certainty is provided by Government in regard to the economy and content of budget 2011. Government needs to ensure that they assist small firms build on this positive sentiment by creating a business environment conducive to small business survival and growth. They must put jobs and enterprise centre stage.”
Action the government can take includes:
1. All Government agencies to pay their own bills to small businesses within 10 days, including local authorities and the HSE, which will assist small businesses with their cash-flow.
2. Reduction of employers’ PRSI – this will incentivise companies to keep people in jobs.
3. Action to tackle our excessive cost-base.
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