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Goldblatt McGuigan / Belfast Telegraph Business Survey

Tuesday 31 January 2012

Confidence is on the increase but firms remain in ‘survival mode’

While confidence levels across the business sector are up on a year ago, 2012 is likely to be a year of caution with businesses focusing on protecting and sustaining current trading positions rather than targeting growth.

That is the mood that emerges from the findings of the latest Goldblatt McGuigan Business Survey conducted last week exclusively for the Business Telegraph amongst 310 local business owners and senior managers.  Businesses were asked about their plans for 2012 in a number of key areas of income and expenditure including Sales, Employment, Capital Investment, Research and Development and Marketing.   Findings show that businesses are cautious about spending money with maintaining the status quo being the aim of most. 

A significant increase in confidence across the businesses surveyed is very clear. 64% of respondents said that they were either confident (49%) or very confident (15%) about the prospects for their business in 2012.  This is in marked contrast to the findings of a previous Survey undertaken at the end of 2010 when only 29% of respondents were confident or very confident about the prospects for their business and 71% either not confident or very concerned. 

Looking at their employment plans for 2012, 87% of the businesses expect to maintain employee numbers at the same level as last year with 5% hoping to increase numbers employed and 8% planning to cut jobs.

For just under half of respondents (47%), their capital investment plans are on par with those of 2011 however 44% of businesses say that they either intend to reduce capital investment in the coming year (17%) or have no plans for capital investment (27%) in 2012.

Marketing appears to be much more of a priority than Research and Development for the businesses surveyed.  23% of businesses expect to increase expenditure on marketing this year and 57% intend to maintain marketing expenditure at the same level as 2011.  Research and Development is less of a priority with 54% of businesses having no plans for R&D expenditure this year.

The recognition of the need for maintaining marketing expenditure is surely linked to the businesses which plan to develop sales in new markets in 2012. 61% of the businesses surveyed plan to develop sales in new domestic markets this year while 29% plan to develop sales in new export markets.

Commenting on the findings of the survey, Sam Goldblatt, Managing Partner, Goldblatt McGuigan said –

“Given the difficult economic conditions perhaps it is not surprising that nearly half of the businesses surveyed indicate they will reduce or make no significant capital investments this year. There is no doubt that many are in ‘survival mode’ and as this will be a year themed around maintenance and sustainability, large-scale investments will likely be few and far between.

It is heartening though that businesses are not battening down the hatches altogether as 80% of those surveyed intend to at least maintain or increase current levels of marketing spend. Even in an ever-contracting market place, a high level of importance is still placed upon branding and profile to attract the attention of and deliver the right messages to target audiences.

Recent news reports have been dominated by gloomy figures of rising unemployment levels and the lengthening of the dole queue. However, the good news is, if you are currently holding down a staff position, you look more likely to retain it. The survey results display a very positive result in the employment area as 87% of businesses intend to maintain current staff levels with only 8% declaring their employees are facing the threat of redundancy.

Although the survey findings suggest there’ll be a drive from local businesses to develop sales in both domestic and export markets, perhaps the results are indicative of aspirational targets which may be hard to achieve given the poor trading conditions that are set to continue throughout the year.  

Research and Development is seemingly not a high priority for businesses with over half surveyed stating they will spend little or no money whatsoever in this area. This suggests that the emphasis will be on maximising the value to be gained from existing and established products and services without having to sanction large investments into exploring new avenues without any certainty of tangible success to be gained as a result. 

However, perhaps it is our policy-makers who need to do more to stimulate the private sector into making investments in these explorative methods of finding new markets and business. Incentivised tax schemes in addition to grants that are available in marketing and research and development could be a practical way of encouraging local business leaders to consider new possibilities to ensure sustainability in the short term with a view to potential success in the future.

If the Government really wants to send out the signal that Northern Ireland is open for business both in the domestic and export markets then real, tangible solutions must be offered to support private sector recovery. Looking to the future the implementation of a much more incentivised system must now be a policy priority in order to cultivate more desirable and conducive trading conditions for business investment and development.”