A CBI report highlights what businesses in London expect for early 2013. Small businesses elsewhere in the UK can use these findings as an aid to making their investment decisions for the New Year.
A report from the CBI provides some useful guidance that UK small businesses can use when planning for 2013. Based on a survey of 168 firms in London, the findings may help SMEs elsewhere in the UK too. The survey was conducted between September and October 2012 and 64% of respondents were SMEs. Some 56% were in professional services, hospitality, leisure, retail and the financial sector.
Perhaps the most positive finding was that 53% of SMEs felt more optimistic about the economic outlook for the first part of 2013 with only 13% more pessimistic (down from 22% in 2011).
Identifying the requirements needed to drive growth, SMEs in the survey mentioned:
1. More competitive tax system (36%)
2. Stimulate bank lending (31%)
3. Push ahead with infrastructure projects (19%)
4. Support for small business innovation (18%)
In a separate report, the UK Federation of Small Businesses has indicated cautious optimism amongst its members for 2013; they see slight growth but are concerned about rising cost pressures.
How these findings could influence your decision making for the early part of 2013
The diagram below attempts to understand the inter-relationships between the concerns raised in the CBI survey and the priorities highlighted as requirements for growth. The government may well be influenced by reports like those from the CBI (despite the small sample size) and the FSB, so these findings could indicate the direction of short-term stimulus.
From this chart, you could conclude that the threat of recession will remain a serious undercurrent well into 2013:
* The Eurozone crisis looks unlikely to change quickly for the positive
* Traditional bank lending likely to remain unchanged until structural reforms are introduced
* Schemes like Funding for Lending are unlikely to show any benefit until well into 2013
* Little sign yet of additional measures to stimulate growth
Any significant government stimulus looks to be focused around infrastructure projects so unless your business is closely involved with the construction sector, any immediate ripple effect from these projects will take time to work through.
SMEs will probably need to constrain investment to self-funded activities or investigate the emerging trend towards peer-to-peer lending. In all probability, SMEs will need to rely on targeting local or niche firms for new business, particularly those identified for growth.
At the same time, small firms will need to continue keeping a close eye on the effectiveness of their investment in people, equipment and marketing. With business confidence fragile and funding set to remain tight, SMEs will need to strive to improve both the effectiveness and efficiency of their existing new business generation activities.
Doing more for less is likely to remain a key mantra for a long time yet. Consider switching those marketing and lead generation activities that are no longer performing as well as they used to, towards newer and possibly less expensive tactics like digital and social media.
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