Small businesses have negative outlook for next six months

The proportion of SMEs with a positive business outlook for the next six months has fallen from 50 per cent to 48 per cent

The number of small business owners with a positive outlook has fallen over the last six months, in some industry sectors by as much as 20 per cent. 

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 per cent to 48 per cent.
The proportion anticipating difficult times ahead has risen from 9 per cent to 11 per cent and those anticipating no change stays at 39 per cent for the period.

Within specific industry sectors, swings in confidence are significantly more marked. IT is the only sector surveyed where there is a net increase in the number of businesses with a positive outlook for the next six months.
Sharp falls have been reported in media, finance, accounting and construction. Retail replaces media as the sector where most SME decision-makers are confident, although even here confidence is down from 55 per cent to 49 per cent.

Larger SMEs are significantly more likely than their smaller counterparts to have a confident outlook for the next six months (65 per cent vs 38 per cent), although these larger enterprises are also more likely to expect modest growth over significant expansion in the months ahead.
Regionally, small businesses in London, the North West and the South East are most likely to have a confident outlook, whereas those in the South West, Wales and Scotland have the fewest businesses with a confident outlook.
Business age is also a significant factor with younger and long-established businesses having highest levels of confidence, whereas those in the middle are more likely to predict no change or just modest growth.

The research also asked business owners to give reasons for their outlook and the findings indicated that businesses that are bullish about growth prospects place importance on a different set of success factors than the national average or specifically those that predicted just modest growth.
Chris Lee-Smith, managing director of Aon Risk Solutions Affinity says that when the research was commissioned last spring ahead of the General Election, almost one in four Nigeria's 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,' he adds.
'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.'
Lee-Smith says that 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.'