Recent report indicates healthier than expected SME sector.

 A leading survey of business support professionals records healthier than expected activity amongst SME clients despite the downturn.

However the balance of +11% reporting an improvement is sharply down on the +47% in the October 2007 survey signifying the gathering impact of the credit crunch and the slide in consumer confidence. The glimmer of hope can be partly attributed to the use of professional advisers whose own client base has seen an increase of +34% over the past year – one of few sectors which benefits from a downturn.
 
The Barclay’s funded survey of over 1000 advisers conducted between April and June this year looks into client performance, current business problems, managing the downturn and the impact of government regulations.

The participants comprising accountants (34%), Business & Management Consultants (34%), Marketing consultants (13%) as well as a sample drawn from the Business Links and independents are principally micro-firms operating in all regions of the UK.
 
The economic climate is now the small business problem ranked the highest by business support professionals, closely followed by government regulations. 71% of respondents believe the burden of paperwork on their clients has increased in the last year and most believe that the government does not understand small businesses well enough to regulate.

Industry self-certification or fewer and simpler changes to regulation are suggestions made by the respondents.

Access to Finance worsening

The survey, which is conducted by the Small Enterprise Research Team (SERTeam) based at the Open University Business School, in association with the University of Nottingham Institute for Enterprise and Innovation (UNIEI) at Nottingham University Business School, also revealed that the majority of those questioned believe access to finance has worsened over the past year.

Speaking on behalf of the research team, Professor Colin Gray, Chairman of SERTeam said: “Viewing small businesses from the perspective of their advisers is a very valuable exercise and enables observers to identify trends rather more quickly than might be the case from conventional surveys of the small businesses themselves, as each adviser has a portfolio of experience to draw from."

"The issue of access to finance is a new one that will need to be watched very carefully but other themes in the survey such as the unwelcome time spent complying with red tape are more familiar, but no less important for that,” continues Gray.

Dr Richard Roberts, Barclays’ SME Market Analysis Director says, “the heightened perception amongst the professional community about the supply of finance to clients is an important finding which, if sustained, could indicate a growing problem for UK entrepreneurial activity.”

In the foreword to the survey he points out that much of the difficulty may relate to problems in releasing equity from the housing market rather than to a reduction in bank lending concluding, “what the survey results highlight is that banks need to continue to develop communications with the support community to ensure a gap between perception and reality does not emerge.”
 

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