Uncertainty around the outcome of the General Election and instability in the Eurozone is not denting the confidence of UK business owners.
A comprehensive new report, led by national accountants Chantrey Vellacott, has revealed that the majority of Owner Managed Businesses (OMBs) are expecting their firms to perform better in 2015 than last year.
The report found that 68 per cent of OMBs across the country expect 2015 to be better than 2014, with 21 per cent expecting it to be much better.
Four in ten businesses revealed they are planning to reduce costs this year – a 12 per cent increase on last year. OMBs have typically been keeping a tight control of costs through the recession, so the results suggest this year’s focus is a response to rising wage pressures, with cost cuts needed elsewhere to allow for competitive salaries to retain staff.
The top priorities identified by business owners for the year ahead are expanding their customer base in the UK (62 per cent), investing in new technology and IT systems (44 per cent) and launching new products or services (40 per cent).
These priorities could change following the outcome of the General Election in May, which continues to create uncertainty. The biggest political concern is a potential increase in business rates (60 per cent) and the potential restoration of the 50 per cent band of income tax (53 per cent).
At present, the risks causing business owners the most apprehension are doubts about the strength of the UK economy (49 per cent), domestic competition (45 per cent) and employee skills shortages (39 per cent). Concerns about the economy are understandable, whilst record low inflation rates are good news for household budgets, the possibility of deflation – an ongoing problem in the Eurozone – could still stifle growth.
Mike Tovey, Managing Partner at Chantrey Vellacott, said whilst it is encouraging that OMBs are confident about hitting targets in 2015, economic and political uncertainties are causing widespread concern.
“Maintaining confidence in the OMB sector is vital for sustaining the UK economy’s growth, so it is reassuring that business owners are still optimistic about hitting profit and revenue targets,” he said.
“It is also impossible to ignore the shadow cast by the upcoming General Election. Businesses are unsettled by the uncertainty and future of government policies, particularly the longevity of the tax incentives they value.
“OMBs are relatively bullish about their prospects, but they also give a clear message to those in power – a stable economy and tax regime is important to maintain OMB confidence and growth.”