The FSB’s West Midlands Small Business Index (WMSBI), is based upon comprehensive research that investigates small firms’ recent performance, current circumstances, and future aspirations.
This latest report, covering quarter three (Q3) of 2022, paints a mixed picture.
Small firms’ revenue performance improved on the previous quarter, with 6% more small businesses reporting an increase than those reporting a decrease. This is the strongest performance of all UK regions. However, the outlook for revenue for the coming three months sees this figure reversed, with 6% more expecting a decline than those expecting an increase.
The region’s small businesses also reported net employment growth in Q3 – the first time this has happened this year. Despite the vast majority reporting that staffing levels had remained static, 7% more small business owners increased employment than reduced it. While this is good news for Q3, estimates for the next quarter indicate that net employment growth will fall to just 1%.
Increased wage bills were reported by the majority. More than two thirds raised salaries in Q3, almost all by more than 2%. A similar proportion expect to see rises in the next three months with half anticipating increases of more than 2%.
In terms of growth and investment aspirations, just under half of respondents expected to grow rapidly or moderately over the next 12 months and as many expected to increase capital investment in their business as expected to reduce it. Less than a fifth expect to downsize, sell or wind up their business.
The main barrier to growth is perceived to be the general economic conditions in the UK. This was mentioned by two thirds of respondents, compared to less than one third who mentioned either increasing fuel costs, accessing skilled labour or rising input costs.
Rob Harrison, Director of small business consultancy Glued, and FSB’s regional policy representative commented:
“In terms of recent performance, many of the region’s small firms fared well in quarter 3, with more reporting revenues and employment increasing, than those seeing a decrease. However, there were also increases to average salary, fuel and materials costs, coupled with heightened concerns about the volatile state of the national economy. The overall picture is one of a continued decline in the confidence of small business owners in the West Midlands – especially as they look to the future.
The new Government must act now, to bring the stability and certainty needed for small businesses to trade and plan with confidence”.