Transport disruption, labour shortages and fears of a winter fuel crisis have failed to dent resurgent small business confidence for the three months to Christmas. After a significant bounce-back in the spring, small business growth forecasts have hardly changed over the last nine months, with 35% of business owners predicting growth for the next three months.
Not only is there solid quarter-on-quarter consistency in the proportion of ventures predicting growth but new findings from Hitachi Capital Business Finance also reveal that the percentage of small businesses fearing they could struggle to survive or collapse has hit its lowest level for two years. This rocketed when Covid first struck back in April 2020, with 29% of small businesses fearing they would close in the next three months. Whilst closure fears remained in double figures for the next three quarters, this month this has fallen to just 5%.
The evidence of new-found stability for many small businesses also comes with a rise in the number of enterprises that predict ‘no change’ in their business outlook on previous quarters. This has doubled since the early months of the pandemic, and has risen every quarter this year to a new high of 52%. For small businesses that are unable to predict growth, or are impacted by current market disruption, there is underlying confidence that enterprises can adapt and weather the storm.
Sector outlook: A winter’s tale of two Christmas seasons Christmas is a pivotal sales period for many small businesses, and the forward-looking Business Barometer study allows Hitachi Capital to capture an early sense of small business confidence as they move into the countdown to the festive season.
Compared to this time last year, the growth outlook for small businesses across sectors is much improved, a trend that underlines the substantial progress that has been made over 12-months. In some sectors current growth outlook has even surpassed pre-pandemic levels.
- After a perilous existence during the succession of national lockdowns, there are firm signs that confidence in the hospitality sector is bouncing back. The falling away of Covid restrictions is allowing many enterprises to gear up for a busy Christmas period, with 35% predicting growth in the next 3 months – almost double the figure this time last year (18%).
- Retail along with travel and distribution buck the trend, with fewer enterprises predicting growth compared to this time last year. These sectors have been seriously impacted by labour shortages and supply chain disruption.
- Despite challenges in labour supply and post-Brexit uncertainty, outlook in manufacturing for the Christmas period is relatively bullish. Growth predictions here have doubled compared to the all-time low this time last year (back from 23% to 49%)
- In sectors where small business growth forecasts were least impact by Covid – IT, telecoms, media and marketing – growth forecasts have continued to rise and are now higher than they were before the pandemic.
Joanna Morris, Head of Insight at Hitachi Capital Business Finance said, “Given the challenges we have all experienced getting fuel in recent weeks – and the warnings there may even be no turkeys for Christmas – our latest findings present an emphatic endorsement of the crucial role the small business community plays to the economy and society at large. Having experienced difficulty during lockdown, many have found ways to adapt and grow in the last year – and for those that can’t grow, a record number of business leaders are able to hold firm and weather the storm.
“The overall picture is one of remarkable solidity when faced with a volatile market – what has appeared is an agility and a willingness to adapt to change. At Hitachi Capital Business Finance, we are gearing up to support the sustainable growth plans of businesses for 2022 – and we hope that, for many, a successful period of Christmas trading will give enterprises the confidence to realise their full potential going into the New Year.”