smallbusiness.co.uk: Helping your business think big

Businesses are in better overall health now than earlier this year, research suggests.

Hilton-Baird Financial Solutions’ Business Health Index, based on 417 business owners and taking into account a range of factors such as tax arrears, bad debt levels, turnover and profitability to calculate respondents’ financial health, reached 0.46 in October 2011 – up from 0.35 in April.

Nearly a third of respondents have increased their employee headcount over the past six months. Meanwhile the number of those cutting staff numbers is down by 4 per cent to 27 per cent.

Evette Orams, managing director of Hilton-Baird says, ‘We should be encouraged by the results of the Business Health Index and the positive change in recruitment habits among UK small and medium-sized enterprises.

‘Regardless of whether people are being recruited on a permanent or temporary basis, this is a significant step in the right direction.’

Despite the positive recruitment news, conditions are still tough for many, with only 27 per cent of respondents able to boast a rise in profitability over the six months to October 2011, compared to 32 per cent in the previous six months.

The situation is aggravated by rising operating costs for 77 per cent and bad debt levels for 38 per cent of respondents.

As a consequence, many are worried about the future, with 34 per cent citing generating new business as their biggest concern over the next six months, followed by managing cash flow (17 per cent).