The small business index, a measure of small business confidence in the UK, showed positive confidence levels among small firms in the first quarter of 2015.
According to the index, small business confidence rose from the last quarter of 2014 by 11.1 points at +28.7 points. Despite this increase, figures were lower than the first quarter of 2014 when it was measured at +35.7 points.
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The figures are based on a survey of Federation of Small Businesses (FSB) members, carried out between 21 January – 9 February 2015, receiving 1,630 responses.
The positive sentiment was reflected in rising revenues and profits. There were 19.5% more businesses which reported growth over the past three months compared to those that saw a decline. There were also 12.5% more business that witnessed an increase in gross profits rather than a decline.
It was also found that the number of businesses who have applied for a loan from their bank and been approved increased to 57% compared to 45% 12 months ago.
Another interesting finding was that businesses increased the number of people they have hired, figures for the last three months were twice as strong as 12 months ago.
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By GlobalDataIn addition, small businesses expect to increase pay at a faster rate, with an average salary increase anticipated of 1.8 per cent. This is the up from 1.5% over the past year.
Low inflation is helping businesses’ reduce their costs. The research found that in the first quarter of 2015 was the lowest-ever proportion of businesses reporting a year-on-year increase in costs.
Against a very positive set of results, businesses continue to struggle with skill shortage. 37% of businesses replied that employing someone with the right skills is a barrier for them to grow their business. This was a sharp rise from 25.4% recorded 12 months ago.
BBA executive director of business finance Irene Graham said:"When it comes to getting finance, the current market is great for businesses. Nearly eight out of ten applications are approved by banks and there are lots of options for firms looking to borrow. Banks are also working with alternative lenders to help businesses get the right finance for their needs, and many refer onto other lenders if it’s better for the customer and their business.
"It makes sense that confidence is growing amongst business owners and more are feeling positive about the future."
