Belfast Telegraph

Confidence is on the increase but firms remain in 'survival mode'

By Clare Weir

Business confidence is up but caution and protection are the themes for 2012, according to an influential survey.

The latest Goldblatt McGuigan Business Survey conducted exclusively for the Business Telegraph polled 310 local business owners and senior managers and has shown that many firms are focusing on sustaining current trading positions rather than targeting growth.

Around 64% of respondents said that they were either confident (49%) or very confident (15%) about the prospects for their business in 2012.

This is in marked contrast to the findings of a previous survey undertaken at the end of 2010 when only 29% of respondents were confident or very confident about the prospects for their business and 71% either not confident or very concerned.

Looking at their employment plans for 2012, 87% of the businesses expect to maintain employee numbers at the same level as last year with 5% hoping to increase numbers employed and 8% planning to cut jobs.

For 47% of respondents their capital investment plans are on a par with those of 2011. However 44% of businesses say that they either intend to reduce capital investment in the coming year (17%) or have no plans for capital investment (27%) in 2012.

Marketing appears to be much more of a priority than research and development for the businesses surveyed.

Just 23% of businesses expect to increase expenditure on marketing this year and 57% intend to maintain marketing expenditure at the same level as 2011. Research and development is less of a priority with 54% of businesses having no plans for R&D expenditure this year.

The recognition of the need for maintaining marketing expenditure is surely linked to the businesses which plan to develop sales in new markets in 2012.

Just over 60% of the businesses surveyed plans to develop sales in new domestic markets this year while 29% plan to develop sales in new export markets.

Sam Goldblatt, managing partner at Goldblatt McGuigan said that many firms are in "survival mode".

"In difficult economic conditions such as these perhaps it is not surprising that nearly half of the businesses surveyed indicate they will reduce or make no significant capital investments this year," he said.

"There is no doubt that we are all in 'survival mode' and as this will be a year themed around maintenance and sustainability, large-scale investments will likely be few and far between.

"It is heartening though that businesses are not battening down the hatches altogether as 80% of those surveyed intend to at least maintain or increase current levels of marketing spend.

"Even in an ever-contracting market place, a high level of importance is still placed upon branding and profile to attract the attention of and deliver the right messages to target audiences.

"Recent news reports have been dominated by gloomy figures of rising unemployment levels and the lengthening of the dole queue. However, the good news is, if you are currently holding down a staff position, you look set to retain it.

"The survey results display a very positive result in the employment area as 87% businesses intend to maintain current staff levels with only 8% declaring their employees are facing the threat of redundancy.

"Although the survey findings suggest there'll be a drive from local businesses to develop sales in both domestic and export markets, perhaps the results are indicative of aspirational targets which may be hard to achieve given the currently poor trading conditions which are set to continue throughout the year.

"Research and development is seemingly not a high priority for businesses with over half surveyed stating they will spend little or no money whatsoever in this area.

"This suggests that the emphasis will be on maximising the value to be gained from currently existing and established products and services without having to sanction brave investments into exploring new avenues without any certainty of tangible success to be gained as a result.

"However, perhaps it is our policy-makers who need to do more to stimulate the private sector into making investments in these explorative methods of finding new markets and business.

"Incentivised tax schemes and breaks in marketing, research and development could be a practical way of encouraging local business leaders to consider new possibilities to ensure sustainability in the short term with a view to implied success in the future.

"If the Government really wants to send out the signal that Northern Ireland is open for business both in the domestic and export markets then real, tangible solutions must be offered to support private sector recovery.

"Where our corporate tax system was once an asset, it is now a hindrance and, looking ahead to the future, the implementation of a much more incentivised system must now be a policy priority in order to cultivate more desirable and conducive trading conditions for business investment and development," Mr Goldblatt added.

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