Sage business index Global trends The Sage Business Index is an annual global measure of confidence across small and medium-sized businesses (SMBs), giving us a clear picture of the pressures and challenges they face. Sage surveyed decision makers from SMBs to find out how confident they were about their business prospects and the national and global economy. Our research identifies how they approach risk and what they see as the barriers to business growth within their country. This year s scores were the highest since the Business Index began in 2011, suggesting that business confidence is still recovering. Executive summary Global business confidence is returning and encouraging a more open attitude to risk taking. Nearly half of business leaders describe themselves as risk takers because they argue that risk is necessary if they want to succeed. However, most business decision makers feel that banks and governments have been slow to respond to this growing positivity and don t provide enough support. More should be done to encourage investment in small businesses the world over. The resulting shortfall in available capital has prompted businesses to look at securing investment from alternative sources, such as crowdfunding and peer-to-peer funding. However, only a small number of businesses have already used these alternative sources, with the majority feeling that they do not know enough about their options. Page 1 of 8
Key theme 1: Business Confidence We asked business decisionmakers to plot their business and economic confidence on a scale of 1-100 (where 1 means a significant decline, 100 means a significant improvement, and 50 means it is no different) on three cores areas affecting their business: Confidence in their own business prospects has risen 5.5 points to 62.01. Confidence in their country s economy has risen 6.38 points to 48.85. Confidence in the global economy has risen 6.01 points to 48.60. Although confidence has increased, businesses are still slightly more likely to believe the global economy is declining than improving and their view on national economies remains more pessimistic than optimistic. Business Index table Global confidence 2011-2013: Summer 2011 Spring 2012 Summer 2012 Summer 2013 2012-2013 Prospects for your business Your country s economy 57.88 58.86 56.46 62.01 +5.5 47.11 47.26 42.47 48.85 +6.38 The global economy 44.47 43.95 42.59 48.60 +6.01 Page 2 of 8
Focusing on specific countries, business confidence is highest in Brazil (71.62) and lowest in Portugal (52.87), though it has improved dramatically in Portugal since 2012 (up 11.81 points from 41.06). Confidence in the country s prospects is particularly low in France (35.17) and Portugal (37.36). In Brazil confidence has declined by 12 points since last year to 47.38. Businesses in Singapore are most likely to believe the global economy is improving (55.15), while Portuguese businesses are the most pessimistic (42.39). Business Index table Confidence by country 2013: Prospects for your business (Summer 2013) Your country s economy (Summer 2013) The global economy (Summer 2013) All markets 62.02 48.86 48.60 USA 64.65 52.80 47.80 Canada 66.80 59.43 52.55 Germany 61.82 54.13 47.93 France 55.16 35.17 44.11 UK 62.55 53.95 51.10 Spain 55.80 43.19 49.19 South Africa 65.80 39.92 46.77 Ireland 62.07 48.22 51.02 Poland 57.60 60.19 47.05 Switzerland 63.53 57.48 50.53 Portugal 52.87 37.36 42.39 Brazil 71.62 47.38 52.06 Malaysia 65.87 52.10 51.56 Singapore 66.96 61.63 55.15 Austria 58.09 48.10 46.65 North Africa 60.92 45.86 47.75 Page 3 of 8
Key theme 2: Attitudes to risk We asked business leaders about their attitude toward taking risks in business and whether they thought that risk was an essential part of running a successful organisation. It appears that in the new climate of economic confidence, business decision makers are willing to take greater levels of risk. Nearly half (47%) of business leaders surveyed described themselves as risk takers, with 73% saying they did so because they feel it is necessary if you want to succeed. Only 32% of business decision makers described themselves as risk averse. Over half (56%) of Brazilian respondents describe themselves as risk takers, more than any other market, with Canada, Poland, and Malaysia all at 52%. Austrian businesses were the most risk averse of all the countries surveyed (48%), followed by the UK and Switzerland, both at 39%. The Global League of Risk Risk-takers Risk-averse Brazil 56% 24% Canada 52% 27% Poland 52% 23% Malaysia 52% 22% Spain 50% 28% North Africa 49% 25% France 48% 31% South Africa 48% 32% USA 47% 31% Germany 45% 36% Singapore 44% 27% Switzerland 43% 39% UK 42% 39% Ireland 42% 36% Portugal 39% 38% Austria 33% 48% Page 4 of 8
Key theme 3: Support for Businesses We asked business leaders for their view on who does the most to support small businesses in their country, the role of government, and the key challenges facing their company. More than two-thirds (69%) of businesses agree that banks aren t doing enough to make capital available to small businesses, and a similar proportion (63%) feel that governments need to put more pressure on banks to lend. Governments need to put pressure on banks to lend. 100 90 80 70 60 50 40 30 20 10 0 All Markets Spain Ireland France North Africa UK Portugal Brazil Germany Malaysia Austria Poland Canada Switzerland South Africa Singapore USA Page 5 of 8
Over half (51%) of businesses feel that the responsibility for supporting start-ups and small businesses falls on governments. In contrast, just 7% think that governments currently do the most to support them. Respondents generally believe the start-up and small business community is doing the most to support itself. Interestingly, this trend was reversed in the USA, where most respondents believe that the start-up and small business community should do the most to support itself. Just 43% of U.S. businesses agree that the government needs to put more pressure on banks to lend to small businesses compared with 63% of all businesses surveyed globally. We found that winning new customers was the biggest global challenge facing businesses. Managing cash flow and attracting and retaining the right employees were ranked the second and third biggest challenges. Other challenges included automating and streamlining processes and expanding to new markets or geographies. Who does the most to support small businesses and who should do the most? Currently does the most? Should do the most? All Markets The start-up and small business community (44%) The government (51%) USA The start-up and small business community (55%) The start-up and small business community (32%) Canada The start-up and small business community (50%) The government (42%) Germany The start-up and small business community (53%) The government (51%) France The start-up and small business community (29%) The government (43%) UK The start-up and small business community (43%) The government (54%) Spain The start-up and small business community (54%) The government (56%) South Africa The start-up and small business community (45%) The government (56%) Ireland The start-up and small business community (59%) The government (59%) Poland Accountants (18%) The government (62%) Switzerland The start-up and small business community (59%) The government (30%) Portugal The start-up and small business community (39%) The government (63%) Brazil Trade bodies or business organisations (24%) The government (73%) Malaysia The start-up and small business community (35%) The government (44%) Singapore The government (35%) The government (51%) Austria The start-up and small business community (53%) The government (56%) North Africa The government (25%) The government (40%) Page 6 of 8
Key theme 4: Alternative Funding This year Sage asked business leaders for their view on alternative sources of funding and whether they would consider using peer-to-peer or crowdfunding services. Due to a perceived lack of support from banks and government, more than half (57%) of businesses agree that they need to look at alternative funding sources. However, while 42% of small businesses feel positive toward peer-to-peer lending and crowdfunding, the majority (53%) feel they do not have enough information about it, while only 4% have already used it. Businesses need alternatives sources of funding 100 90 80 70 60 50 40 30 20 10 0 All markets Spain France Brazil Singapore Portugal Ireland North Africa Poland Malaysia South Africa Canada USA UK Austria Switzerland Germany Page 7 of 8
Businesses in Spain are the most likely to agree that small businesses need to look at alternative funding sources (77%). They also have the most positive impressions of peer-to-peer funding (63% positive, compared to 42% globally). In fact 10% have already used peer-to-peer or crowd funding (compared with 4% globally), and 24% say that, although they have not used it yet, they would be happy to do so. Conversely, UK businesses are least positive about peer-topeer and crowd funding just 30% have a positive impression. Only 41% of German businesses believe that small businesses need to look at alternative sources of funding (compared with 57% globally). How positive do businesses feel about peer-to-peer and crowd funding? About the Sage Business Index To generate the Sage Business Index, we used online interviews with 11,734 decision makers in 17 countries from Populus, an opinion research and consultancy firm. Since our last Business Index in summer 2012, we have extended the reach of the survey to include North Africa (Morocco and Tunisia). We drew the businesses from two sources: 6,876 respondents came from local Sage customer databases, and 4,904 respondents from a dedicated online panel of business people. From this we chose a random sample of decision makers ensuring a spread of business sizes and industries. Index methodology Our index methodology allows us to measure the changing mood of the businesses we surveyed in relation to business and economic confidence. We retrospectively applied this index methodology to the countries that took place in the first business survey in February 2011 (U.S., Canada, UK, Germany, and France). In this study we asked businesses questions with the following answer options and their index score weighting: Do you feel your country s economy is recovering or declining? and Do you feel the global economy is recovering or declining? It is recovering significantly (100) It is recovering slightly (75) It is no different (50) It is declining slightly (25) It is declining significantly (0) Are you more or less confident of your business prospects over the next year? More confident (75) No different (50) Less confident (25) 2013 Sage Software Canada, Ltd. All rights reserved. Sage, the Sage logos, and the Sage product and service names mentioned herein are registered trademarks or trademarks of Sage Software, Inc., or its affiliated entities. All other trademarks are the property of their respective owners. Page 8 of 8