Entrepreneurs' confidence in UK economy dips

According to the Tenon Forum think-tank recent economic uncertainty has left UK entrepreneurs feeling pessimistic about future prospects as business confidence hits a three-year low. Research commission by Tenon interviewed 1,010 private sector senior managers and above from small and medium businesses firms with between 5 and 499 employees. The survey covers all business sectors across the whole of England, Scotland and Wales.

It seems that the credit crunch has dampened entrepreneurs' spirits in recent months with less than two thirds (61%) of those surveyed stating they are positive about their business prospects for the year ahead. These figures are down from 2007, when 86% of owner-managers said they felt positive about their business prospects and in 2006 the figure was 78%.


Experience of economic downturn in the past has made entrepreneurs more cautious when it comes to their business prospects. Entrepreneurs who've been through a previous recession are considerably less optimistic about their prospects for the year ahead than those who have not; only 56% are positive about the coming 12 months, compared to 69%of business owners who have not experienced a recession.


When asked whether Britain is good for business, more than a third (34%) of UK SMEs disagree - suggesting the economic uncertainty and recent legislative changes are taking their toll on entrepreneurs. However, a further third (33%) think that Britain IS good for business and a quarter (24%) expect to see an increase in the numbers of entrepreneurial businesses setting up in the UK - indicating a healthier climate on the way for SMEs.


The current legislative environment is perceived to be particularly lacking in business-friendly measures - causing many entrepreneurs to reconsider their political allegiances. A massive 62% believe the party that best understands entrepreneurial needs is the Conservative party, compared to 28% in 2006 - with only 6% backing Gordon Brown's Labour party to see them through.


The Tenon Forum research reveals that Alistair Darling's latest Budget has only served to further alienate entrepreneurs, leaving many looking for a change. Just 5% feel their company is better off following the 2008 Budget, with an overwhelming 57% saying they are worse off or considerably worse off. However, almost a third (28%) feel there has been no change at all in their situation
since the last Budget.


Despite recent economic uncertainty for both businesses and consumers alike, not all SMEs see rising inflation costs and restricted borrowings as a major worry. In fact almost half (47%) of those surveyed believe the economic downturn might provide opportunities for their organisation. Such opportunities include taking clients from competitors (51%), the ability to grow their business (36%) and the chance to make more acquisitions (26%) - whilst four in ten (41%) think the downturn will open doors for their company.


Forum members agreed that a downturn can present opportunities, with one commenting "my business always does better in hard times. We have to prepare in the bad times to get through the good." Another member added, "There's so much less competition out there during a downturn - for us, it's a golden opportunity." Businesses in London and Scotland see the most opportunities in the predicted downturn - 53% of London SMEs and 54% of Scottish ownermanagers see the potential recession as providing opportunities for them, compared to just 41% of businesses in the South East and 42% of Northern SMEs.


It seems that SMEs are taking no chances when it comes to preparing for an economic slump, with the number making preparations for recession increasing significantly to 85% from 70% six months ago. One Forum member observed that the downturn could become a self-fulfilling prophecy, saying "if 85% of businesses are preparing for a downturn, there will definitely be one." The Think Tank concluded, "there are two camps in a time like this; one group which is preparing for a downturn and another who will be preparing for the upturn that will follow."

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