Spring Brings Increasing Sales and Customers
Yorkshire and Humber is showing signs of economic recovery and stability with 74 per cent of businesses reporting their performance has remained stable or improved over the last three months, according to the Spring 2010 Business Snapshot Survey commissioned by Yorkshire Forward and undertaken by IFF Research.
Increased sales and more customers are the most frequently reported improvements to business performance, with a third of businesses with improved performance reporting that their sales had increased (30 per cent) and a fifth reporting higher numbers of customers (22 per cent). Expectations about future business performance are quite positive with 38 per cent of businesses thinking their performance will improve and only 13 per cent expecting it to worsen. A third of all firms expect higher volumes of output (35 per cent) and domestic orders (33 per cent) in the coming three months, as businesses report further improvements in their trading environment.
However many businesses have seen a negative trend in terms of their cash flow (38 per cent) and profit margins (35 per cent) over the past three months, indicating a tough competitive environment. The proportion of businesses seeking additional finance or credit has remained stable with only eight per cent having sought new finance or new lines of credit.
Recent investment levels in key business areas have been solid, particularly in marketing & sales and staff training which are top of the investment priority list. Encouragingly, a clear majority of businesses expect to maintain their future levels of investment. In addition future investment trends indicate sustained levels of investment with roughly a third expecting to invest more overall (31 per cent), more in marketing & sales (30 per cent) and more in training (20 per cent.)
Interestingly more recently established companies were more likely to report improved business performance, with 39 per cent of establishments in business for fewer than five years reporting improved business performance over the last three months. This compares to just 28 per cent of companies that are 10 years or older. This indicates that older companies may be finding it harder to adapt to the crisis or take advantage of the emerging upturn.
There appears to be a distinct difference in performance between small and larger companies, with small businesses with one to nine staff being more likely to report worsening business performance. Whilst at the same time small companies were more likely to increase their overall investment. However, larger companies are driving the trend for optimistic investment plans in the future.
External costs are driving up cost pressures for many firms with energy costs surpassing transport costs as the single most significant cost pressure in business. Despite these increasing cost pressures, businesses do not appear eager to pass cost increases on to their customers with just a quarter (25 per cent) of businesses passing these costs on.
Patrick Bowes, Chief Economist for Yorkshire Forward commented; “We recognise that it is a positive change for Yorkshire and Humber companies that domestic sales are likely to improve in the next three months and this provides early indication of emerging recovery in UK domestic markets. In particular, we are pleased with the performance of the manufacturing sector as 57 per cent of manufacturing businesses have reported improved business performance in the past three months.”
The Business Snapshot Survey results are very timely with the survey being carried out last month and the results complement those of the Autumn 2009 National Business Survey. Around 450 businesses in Yorkshire and Humber participated, with interviews being conducted via the telephone with respondents at a senior level.
Ben Davies, Associate Director at IFF Research who headed the study, commented: “When we were speaking with the region’s businesses, and exploring their attitudes to the economy and future prospects, a common theme was cautious optimism. There is a marked change in opinion from autumn last year when the survey was last run. Yorkshire and Humber’s business leaders are increasingly bullish, and that’s good news for the region.”
