Small businesses in Northern Ireland are optimistic about the future after showing their steel in the last 12 months, according to the results of a major survey.
Around half of respondents to the Federation of Small Businesses (FSB) Voice of Small Business annual survey had seen a fall in the profitability of their businesses last year.
Despite this decline, half had introduced new products and services in the past year and said they expected to do so again in the coming year.
The survey, carried out by ICM, showed Northern Ireland businesses were bigger borrowers than those in the UK.
The mean Ulster small business borrowing was £45,900, compared to a UK average of £25,400. However, 42% of members in Northern Ireland also said they had not borrowed any money in the past year.
Overdrafts were the most common source of long-term finance for small businesses, but just over one fifth had resorted to their personal savings to keep their businesses afloat.
Wilfred Mitchell, the FSB’s policy chair, said the survey highlighted the need for banking reform — which he called on politicians to support.
“What we really want to see is the Government do more to put pressure on the banks to increase the flow of credit and give the small-business sector the help it needs to lift the entire economy out of recession and back to recovery.”
Mr Mitchell said issues with banking and lending were a pressing concern for small businesses and the FSB as the economy recovers from the deepest recession in 70 years.
He said: “Evidence reveals that over a third of those surveyed (34%) have experienced an increase in their overall interest rate charge compared to the last few years.
“The survey also shows that bank overdrafts remain the most common source of long-term finance for small business owners in Northern Ireland.
“However, access to finance and much needed credit remains a major concern for the small business sector and, with many unable to obtain it from their bank, the report uncovers a growing trend towards a raft of alternative sources such as personal savings and unsecured loans.”
The FSB has also said the Northern Ireland Assembly should consider setting up a financial mediator service to help small businesses struggling to get finance from banks.
The survey revealed around one-fifth of members have used their own savings (22%), their retained profits (20%) and secured bank loans (17%) to keep in business. Around 7% of members in Northern Ireland had used a personal credit card while 6% had taken out an unsecured bank loan as a major source of finance in the last 12 months.
Mr Mitchell added that tougher measures aimed at ensuring banks lend much needed funds to viable small and micro businesses must be |included in any new system |introduced.
“Difficulties with banks are a constant stress for FSB members, with their chief complaint being problems obtaining access to credit and additional lending facilities,” he said.
He also said the Assembly could help small businesses by including a clause in future legislation on public procurements requiring main contractors to pay sub-contractors in a set period of time.
Mean turnover for Northern Ireland businesses was £830,000, compared to £524,000 for UK businesses — but the FSB said the discrepancy was an anomaly in how results were collated and not an indication of more successful businesses in Northern Ireland.
The responses of Northern Ireland businesses reflected wider preoccupations which have been played out in the run-up to the General Election.
Almost 90% said reducing the employers’ tax burden would improve businesses’ economic prospects. But only 40% said a cut in employers’ National Insurance would improve their economic prospects in the recession.
And if a tax cut was to come, over 55% would spend the savings on growing their business
instead. A quarter of businesses surveyed said they would use the savings to employ more staff, while just under one third said they would spend it on developing new services and products.
Late payment was a pressing concern for businesses, with half of government clients not paying up in time. Almost 40% of government agency clients were late payers. Half of clients in the private sector also failed to pay on time.
Around one quarter of those surveyed were in retail — a higher proportion than UK-wide — 15% in construction and 10% in manufacturing. Just under 30% of the respondents, whose average age was 47, were female.
Three-quarters of those surveyed owned just one business, while 16% had two.
The FSB said the survey, conducted by ICM Research in September last year, was key to informing its policy work.
Of 10,000 responses, 327 were from Northern Ireland businesses, reflecting Northern Ireland membership as a proportion of UK FSB membership.