By Max Clarke

The UK economy might be on the road to recovery, but business confidence is still faltering with 28% of UK businesses admitting they are concerned about generating and winning new business over the next six months.

This is the bleak forecast revealed in the latest SME Trends Index from commercial finance brokerage, Hilton-Baird Financial Solutions.

Their findings differ from those published this morning by Barclays Corporate, which surveyed business owners predicting steady growth over the coming decade.

Hilton-Baird’s biannual survey showed that UK businesses are ultimately worried about the future, with only 33% of respondents expecting their business to expand in the six months to October — down from 45% last November — despite the growth recorded in UK GDP during the first half of the year. These business fears are prevalent across all industry sectors and sizes, with the construction, haulage and the printing, publishing and packaging industries the most apprehensive as to what the immediate future will hold.

Worrying though the news is, there are glimmers of hope to be found within the report, as Evette Orams, Hilton-Baird’s Managing Director, explains:

“We have found there to be a correlation between increased business confidence and businesses using flexible funding solutions, which are tailored to fit their needs.”

Despite these findings, there are methods businesses can employ to help secure their future and ensure a positive outlook. In particular, companies using invoice finance and asset finance had higher expectations for their business over the next six months, with 41% of invoice finance users and 39% of asset finance users predicting that their business will expand over the next six months. This compares to only 33% of bank overdraft users, signifying that the type of funding that small enterprises secure can impact on business confidence.

“By utilising the correct funding,” Orams continued, “a business will undoubtedly see a positive effect on their strategic path and on their investment. Access to cash can open many doors and allows for optimism as businesses are able to take advantage of opportunities as they arise, be they a new order, venturing into new territories or simply agreeing early settlement discounts with their suppliers.
"Confidence is key not only to a business’ success, but in fact in everything we do, which is fundamental to our recovery as a nation.”

Further analysis shows that UK businesses, whilst primarily concerned about the prospects of securing new business over the six months to October 2011, have a number of additional areas of concern. The figures revealed that 25% of engineering and maintenance firms are worried about their customers taking too long to pay for goods and services already rendered. More than a third of manufacturing firms are anxious about the potential rise in costs of raw material and fuel, with 28% of companies turning over more than £3 million sharing this concern.

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