ONE IN five small firms in Newcastle fear they may be forced to close by the end of the year, according to a new survey.
The worrying figures from the Viking Small Business Barometer also found that 10% of local small firms did not expect their profits to increase in the first half of this year.
However, almost six out of 10 considered winning new business to be a major priority over the next 12 months, according to the study which looked at the last three months of 2012 and asked firms about their intentions for the year ahead.
Start-up businesses – those that have been running for less than three years – were the most optimistic with 78% planning to expand in the year ahead, compared to fewer than one in four established businesses.
Sean Bailey from Viking said: “The findings of the report offer an insight into the current conditions faced by small businesses in the area.
“It demonstrates that the recent downturn in economic growth has had an effect on SMEs, leaving them with a bleak outlook for 2013.
“However, it is inspiring to see that some business-owners are focusing on winning new business this year and giving themselves the best chance to stabilise and begin to grow when they find a firmer footing.”
The data, collated for the office stationery supplier, also found that a third of Newcastle SMEs expect their biggest outgoing to be spending on chasing new business.
There was also better news on the numbers being forced to sell or remortgage their home in order to obtain the capital to start or continue running their business. This has fallen from almost one in five to just 9% in the last quarter of 2012.
Meanwhile, a third said that a cap on fuel duty is likely to have the biggest positive effect on their business in the year ahead.
However, Government moves to provide more funding for the Local Enterprise Partnerships and an increase in annual investment allowance were expected to have deemed to have no impact on their future success.
The Viking Small Business Barometer speaks to the same 1,000 small business-owners and managing directors, across 15 different sectors, every three months to pull together the quarterly tracker report.
The UK’s small business sector employs 14.1 million people and is widely considered to be at the heart of the economic recovery.