A new study by the Federation of Small Businesses (FSB) reveals that poor payment practices alone are threatening the viability of more than 36,000 (8 per cent) of small firms in the West Midlands.
The ‘FSB West Midlands Small Business Index’ is a quarterly analysis of small businesses confidence, based upon their recent performance, current trading conditions and future aspirations. This latest report, covering the fourth quarter of 2021, also finds:
- confidence amongst West Midlands small businesses has fallen significantly since the previous quarter, marking the third successive decline since Q1 2021;
- more respondents reported a decrease in gross profit margins (45 per cent) than those who saw an increase (34 per cent);
- more expected margins to be squeezed further (35 per cent), than those who expect them to improve (34 per cent); and
- more than half (57 per cent) said that they had increased average salaries over the period and almost three quarters (71 per cent) anticipate that their average salaries will increase over the next 12 months.
In terms of the main barriers to small business growth in the future, 74 per cent cited the poor domestic economic conditions, 39 per cent low consumer demand and 24 per cent the lack of availability of skilled labour.
Hollie Whittles, Chair of FSB West Midlands and director of two small businesses in the region commented:
“These latest findings demonstrate that confidence in the region is falling and fragile, with trading conditions remaining extremely challenging while costs and inflation are soaring.
The Government’s planned hikes in National Insurance in April, look even more misjudged in light of this new evidence.
I believe that 2022 can and will be a better year for our small businesses, provided they get the breathing space and support they need to recover. Other report findings support my view. For example, employment remained stable during quarter 4 and that more than half (51 per cent) of the region’s small firms expect to grow in the next 12 months.
These achievements and ambitions need to be nurtured by policymakers, not snuffed out. That’s why FSB is calling for the planned rise in NI to be scrapped, or at least to be offset by an increase in the Employment Allowance from £4,000 to £5,000; for an increase in the small business rates relief ceiling to £25,000, which would take 200,000 more firms out of this regressive tax; and for every big business and government organisation to abide by the prompt payment code”.