BUSINESS OWNERS’ RETIREMENT HOPES CONTINUE TO FADE

RETIREMENT has become more elusive than ever for the North West’s small business owners.  Meanwhile the region’s SMEs remain overwhelmingly dismissive of Government attempts to stimulate bank lending to businesses through the Enterprise Finance Guarantee.

The latest quarterly survey of 200 business owners in the North West, carried out by Clifton Asset Management (CAM), also reveals deepening pessimism about the region’s prospects compared to the rest of the UK.  The survey from CAM, which provides specialist financial and strategic advice to SMEs, shows that 86% of the North West’s business owners feel their retirement is further away now than it was a year ago. This compares with 78% in the previous quarter’s survey, and 57% 12 months ago.

“Despite recent speculation about ‘green shoots’, we are still deep in the worst recession in living memory and it is no surprise to see this fact reflected in the way small business owners see their future prospects,” said Neil Greenaway, managing director of Clifton Asset Management.

However, when asked if they had been forced to make job cuts in the last 6 months only 28% said yes, the lowest figure in the UK.  And just 12% conceded they would have to make further cuts to their payrolls between now and the end of the year.

“These figures give some cause for optimism that the worst may be over but they should be treated with caution.  For example, even though less employers in the North West are having to make job cuts, only a quarter are in a financial position to run a company pension scheme and, of those, less than half are able to make regular contributions.  This speaks volumes about our current financial plight and the degree of apprehension most business owners have about the future.” said Neil. 

Meanwhile according to the CAM research, there is still very little enthusiasm in the North West for the Government’s flagship scheme to support small businesses through the downturn, the Enterprise Finance Guarantee.  While the number of business owners who are aware of the EFG has risen to 65%, a massive 94% see no benefit in making an application under the scheme.

Neil Greenaway commented:- “We learned recently from the Government’s own figures that the amount of money in the form of loan guarantees which got through to businesses over the financial year just gone, had actually fallen on the previous year and was well short of the £1.3 billion budget which had been set.  Once again our survey backs up the huge store of anecdotal evidence we have received from business owners who again and again report that it remains near-impossible for them to access finance from the banks.  Likewise, only 21% of those questioned in our survey say that that the Government fully appreciates the crucial role of owner-managed businesses in the UK economy.”

The CAM research also revealed that just 35% of North West small business owners believe the region is better placed than the rest of the UK to withstand the recession, and a full 57% believe the worst of the downturn is still to come.

“Since we launched our survey there has been a steady increase in the number of business owners who are telling us that their retirement has moved further away.  While there are some encouraging signs for the region, our research continues to highlight the desperate situation for many in regard to pension schemes, and a complete lack of confidence in the Government’s attempts to support their sector. Both of these factors need to be properly addressed before the North West’s SMEs can feel fully confident about the future.” said Neil Greenaway. 

UK POPULATION RISKING FUTURE FINANCIAL CRISIS

IN a disturbing reflection of attitudes towards planning and financial literacy in the UK, more than 25% of Brits are relying on winning the Lottery to help improve their financial situation.  This is compared to just 5% who will seek professional help to improve their finances, according to a YouGov survey commissioned for Financial Planning Week 2009 taking place between 7 September 2009 to  13 September 2009.

Astonishingly, more than 5 times the number of those considering professional help feel their best chance of improving their finances is by scooping the lottery, despite a minuscule 1 in 14 million chance of hitting the jackpot.  When it comes to improving their financial situation, the survey commissioned by the Institute of Financial Planning in association with NS&I (National Savings and Investments), found that 41% of Brits recognised the need to save more and reduce debt (40%), while only 5% plan to get the advice of a professional.

Nick Cann, Chief Executive Officer of the Institute of Financial Planning, warned some of these attitudes need to change.  He said:- “The results of our 2009 Survey reflect the fact that many continue to ‘bury their head in the sand’ by ignoring financial problems in the hope that they go away. Only 20% are currently satisfied with their financial position - suggesting 80% of the population should be looking for help, but either decide to do nothing about it or rely on a lottery win which is unlikely in the extreme.”

Financial Planning Week is a not-for-profit programme aimed directly at helping people identify their goals in life and work out how to plan their finances in the most effective way to achieve them. It is run by the Institute of Financial Planning (IFP) and its aim is simply to kick-start people into thinking about their finances. Tips to help them on this journey can be found at:- financialplanningweek.org.uk.  Mr Cann said:- “There seems to be a myth that financial planning is just for the wealthy or that professional help is expensive, which is why the IFP runs the Financial Planning Week initiative each year. We are aiming to change perceptions of financial planning by providing tips, tools and guidance to help people at all stages of life via our website - showing how applying just a few simple steps can make a huge difference.”

When compared to the results of a similar survey run in 2008, fewer people are planning properly. In 2008, 85% of respondents reported that they had identified their financial priorities and goals and were making appropriate plans to achieve them. In 2009 this number reduced to 68%.  Given the challenging conditions of the past year, it is likely that those who previously believed they had effective plans in place realised that they had not gone far enough. The 30 to 44 age groups fared particularly badly, with almost 90% not having a financial plan that they review regularly.

Saving is a crucial part of Financial Planning. Only 23% of people surveyed believe they are saving enough or more than enough for future financial needs. Worryingly, 39% are not saving enough, saving nothing (22%), or unsure about whether they are saving the right amount for their circumstances (15%).

John Prout, Director at NS&I comments:- “Money can be a complex subject, but both the IFP and NS&I recognise the growing need for all of us to plan our finances better and saving is an important past of this process. Making sure that you set some money aside on a regular basis is a very good financial habit to have. NS&I’s latest Savings Survey showed that more than half of the population said they couldn’t afford to save any extra money each month because their outgoings prevented them from doing so. Financial Planning Week is an excellent way to encourage people to examine their income and expenditures, each month, to ensure that they live within their means.”