Much of Europe remains in recession and 59 per cent small and medium sized companies across the globe are either watching revenues remain static or decrease. In that context you would expect unemployment to be a serious issue.

While it is still a challenge, despite a few exceptions such as Spain where youth unemployment has hit 55 per cent, it seems jobs are being created or maintained. For example, the results from the latest Sage Business Index found in the UK the number of people out of work fell by 37,000 to 2.49 million in the three months to November 2012.

This is in no small part a result of the thousands of SMBs in Europe – which make up 99 per cent of the economy – keeping the job market buoyant. In fact, 82 per cent of businesses have maintained or grown their employee base. Over half (57 per cent) have seen staff levels stay the same and a quarter (25 per cent) have increased their number of employees. Just 15 per cent had laid people off over the six months to October 2012.

The top three countries that have reported most growth in employment are Malasia (40 per cent), Austria (39 per cent) and Brazil (38 per cent). Meanwhile, Spain (26 per cent), Portugal (21 per cent) and Ireland (19 per cent) have laid off most people off.

Globally, a third (33 per cent) of small and medium sized companies say that having a skilled workforce to recruit from is one of the most favourable aspects about their country as a place to do business. Interestingly, this rises in those countries that have experienced most economic woe including Ireland (63 per cent), Spain (42 per cent) and Portugal (39 per cent).

What is even more encouraging is that when asked what they plan to do in the next year, a fifth (20 per cent) of SMBs globally said they would recruit new employees. This rises to 40 per cent in Brazil, 33 per cent in Austria and 27 per cent in Germany. Just five per cent of Spanish, seven per cent of Portuguese and 14 per cent of French small and medium sized companies said they would recruit new employees in the coming year.

As 2013 gets fully underway, it looks like SMBs across the globe are boosting employment levels and keeping people in work. This is vitally important – from an economic and social point of view – and ensures skills can be retained in companies for the recovery.

The UK government has announced the first stages of creating a government-backed business bank.  “Not another scheme” has been the cry from some SMBs.  But on closer examination, could this be the break small to medium sized businesses have been waiting for?

The Department for Business, Innovation and Skills has said that – when fully operational – the fund could provide up to £10 billion new and additional business lending through both government and private sector funding.

Supporters of this new approach claim that this is just the support SMBs need – a scheme effectively forcing lending to small to medium sized businesses,that are the backbone of our economy. 

Critics have said that this adds to an already confusing and unclear business loan landscape coming within months of the government’s ‘Funding for Lending’ scheme, to name one example.

The Business Secretary has also announced the launch of a £60 million pot of Regional Growth Fund investment and bank finance at the Community Development Finance Association’s (CDFA) annual conference.

UK SMBs are not alone in their plea for smoother access to funding.  It seems the EU is listening; European businesses will potentially benefit from relaxed rules for small business loans. 

Conservative MEP and Economic and monetary affairs committee member Vicky Ford has said that capital requirements imposed on banks for business loans may be reduced – this is a deliberate step to shift European banks’ viewpoint that business loans are costly to provide.

There are clear and visible attempts by national governments and the EU to oil the wheels of business funding.  Most SMBs would agree that anything that removes barriers to sensible and fair lending is a positive step – but will the UK and EU steps go far enough?

Join the debate #SageBI.

Every week new stories emerge about companies having to work harder than ever to survive in the Eurozone. According to media reports, the outlook remains bleak.

For example, Moody’s – the credit rating company – declared that Germany may need to change its rating outlook from stable to negative (they have since kept their AAA outlook). Meanwhile, Spain may become the fourth Eurozone country to require a full bailout.

However, despite the headlines it’s not all gloom and doom. With the quiet summer period taking place, the Eurozone front may settle for a few weeks allowing business to reflect on the situation.

In our last Sage Business Index we mentioned that the top three international business challenges for small businesses were:

1)      Inflation and rising costs of energy, fuel and raw materials
2)      Instability/uncertainty in local economic market
3)      Reduced cash flow in the supply chain (suppliers/customers)

With some breathing space afforded by the holidays, devising strategies to tackle these concerns should be the aim of governments internationally. This may involve investing in businesses, an already common activity for countries that are experiencing slowing economies. When business contracts it is important for governments to get people spending again, to make sure businesses have the resources they need. For instance, Britain is looking to boost exports to £1 trillion annually by 2020.

While policy-makers agonise over a way out, small businesses need to focus on minimising costs, increasing customer service and responsiveness, and looking for new sources of funding. This may mean consolidating or changing suppliers to get better deals, investing in customer service training and looking for government initiatives aimed at shoring up businesses.

But while firms do this, perhaps they should remember that tackling the Eurozone might feel a little less daunting after a summer break.

It’s encouraging to see in the news recently that the UK treasury, after months of negotiating, is expecting the EU to approve its £20 – 40bn credit easing programme ahead of the Budget. Funding has been an issue for SMBs for the last few years with many reporting not only challenges in access to funding but also concerns with banks’ inability to be flexible on repayments at a time when many small business customers themselves are finding it difficult to pay invoices on time.
If we look at the findings of the last Sage Business Index, in relation to funding in general, some regions were more affected than others at the time of the survey. The in-depth report by Sage in fact, reveals that a quarter of small businesses in the UK and Spain cited a lack of capital or access to funding as being a major problem for their business meanwhile less than 20% of businesses in other countries indicated that this was a major challenge.
One small business owner in the UK was quoted: “It’s just about treading water / maintaining the status quo until everything calms down.”
The initiative aims to make credit 100 basis points cheaper for small firms than previously available. Under the £20bn scheme, the Treasury will offer to guarantee borrowing by high-street banks, bringing down their costs of funding. Banks will then be obliged to ringfence these funds for low-cost loans to small businesses.
Cheaper borrowing will give small businesses the breathing space they need to navigate these harsh economic times and is a welcome break to the current scarcity of financing options.

The first quarter of 2012 saw the Institute of Chartered Accountants in England and Wales (ICAEW) release findings of its Business Confidence Monitor (BCM) which shows business confidence remains firmly in negative territory and little change since the end of 2011.
The BCM polled 1002 businesses in November 2011. If we compare these findings with those of the Sage Business Index published in September of the same year – it’s interesting to see how the mood shifted from one of cautious optimism earlier in the year to the more depressed business mood recorded in the BCM. It’s hardly surprising when you consider the record falls seen in the last quarter of 2011.
An additional survey from the Confederation of Business Industry (CBI) appears to correlate. It shows sentiment among the UK’s small and medium-sized manufacturers falling for the third quarter running in the three months to January, as output stagnated and orders fell against a backdrop of heightened economic and political uncertainty.
It will be interesting to see what the next Sage Business Index, due out at the end of March will illustrate. Given the current economic climate and the fact that capital has been particularly hard-hit by turmoil in the financial sector as the eurozone debt crisis continues, it’s now likely to show businesses at best remaining highly cautious.
But as we’ve seen over the past 12 months, SMBs have already shown a lot of resilience and while it’s certain they will be bracing themselves for a long, hard road to recovery – recovery and survival will be at the forefront of business planning.