Glass Half Full: Small Businesses More Optimistic Despite Economic Uncertainty
Small businesses are facing the most uncertain economic time in recent history, yet the Make or Break Report 2017 from Xero examining the opinions and character traits of successful small business owners going into 2017 has revealed irrepressible optimism as a common trait.
Small business confidence was still found to be high, particularly with very young businesses, despite economic uncertainty being the most pressing concern for UK and US business owners. The vast majority of 1 year old (94%) and 2 year-old businesses (84%) said they felt more confident going into 2017 than the previous year, and over three quarters (79%) of small businesses said they felt confident about their business’ survival in 2017. For those going through a tougher time, nearly a fifth said they expected 2017 to be a turnaround year for their business. So why is it that small businesses are feeling so confident?
They want to cut themselves free of the red tape
- A huge 74% of UK small businesses said they remain confident about the future despite Brexit and the resulting economic instability being the number one concern for small businesses going into 2017.
- Nearly a fifth (18%) said that Brexit would reduce some of the restricting red tape and legislation surrounding the EU, increasing trading and local buyers as a result. This view was shared by US small businesses who were asked the same question in relation to Trump’s presidency, highlighting fewer regulations as the most positive impact.
They are shunning traditional office structures to increase productivity
- Successful SMBs are exchanging traditional office structures for remote working and flexible working hours (42%), hailing this as the biggest driver of productivity for themselves and their staff in 2016.
- 94% of small business owners using cloud software report benefits, citing paperless systems, remote working and simplified software management.
They are prioritising the health and happiness of themselves and their employees
- Over three quarters of small business owners (78%) across the UK and US believe the personal health of them and their staff directly impacts on the success of their business going into 2017.
- Getting enough sleep was revealed to be the most important factor for nearly two thirds (63%) of small business owners to stay healthy in body and mind.
- Exercising regularly, getting support from friends and family and giving themselves adequate time off was also highlighted by small business owners – in the last year 84% found ways to take a break with holidays and avoiding the commuting rush by working from home occasionally.
- In fact, over half of small business owners (52%) said they wanted to give themselves more of a work-life balance in 2017 than they did the previous year.
They see themselves as in control of their own destiny
- For successful business owners, the report revealed that risks are seen as part of the job, as over half (54%) said they have taken financial risks with their business.
- When these risks did not result as expected however, over three quarters (77%) of small business owners said they had no regrets – they see these mistakes as a fundamental learning experience.
- Business owners were again found to be optimistic when forecasting despite the economic outlook - over two thirds (69%) said they are optimistic and aggressive about their achievable targets.
- For 52% of those surveyed, they did not think Brexit would have an impact at all, and for nearly three quarters (74%) they were confident in their business’ success, regardless of instability.
While confidence and optimism from small businesses was found to be the underlying trait of small business owners, the report revealed areas for improvement and viewpoints to consider.
- Over a third (42%) of small business owners considered their accountant to be a trusted business advisor or mentor, but over half do not necessarily always follow their advice.
- Fewer than one fifth of small business owners (16%) said they were worried about automatic pension enrolment, but behind Brexit and changes to the national living wage, auto enrolment was the third policy accountants were most concerned would impact their clients in 2017.
- Chasing payments for overdue invoices still plagues as the biggest time waster for a fifth of small business owners across the UK and US. The threat is compounded by the importance small businesses put on cash flow in 2017 – for over a third (34%), cash flow was said to be more important than ever given the instability of the economy.
- With small businesses’ biggest worry for Brexit being reduced consumer spending, small businesses admitted to forecasting far more aggressively than accountants would like their clients to.
Gary Turner, UK co-founder and managing director at Xero, said: “Our report has revealed a remarkable trait among small businesses to look on the bright side, particularly in the current climate when faced with so much uncertainty. Given the importance of small business health on our economy here in the UK, it is fantastic to see that small business owners are feeling so confident about the future. But, as cash flow and healthy finances have never been so vital, owners must keep a sense of realism and listen to external advice and support to ensure that business continues to grow and prosper through the next few years.”
Josephine Fairley, Green & Black’s co-founder and serial entrepreneur said: “Owning a business is invariably a rollercoaster full of ups and downs and you must learn ways of thinking your way out of difficult situations, so it’s brilliant to see such optimism coming through as a defining quality in an entrepreneur from Xero’s report. Having a concrete plan for your business combined with a can-do attitude can help you to win regardless of what you are faced with.
“While optimism is important, consulting with experts and keeping on top of your data can enable you to make the right decisions for your business that will help you not only survive, but thrive.”