Small and new businesses best models for success

A report by FreeAgent Central has suggested that small and new businesses are the best models for success in the financial downturn.

Conducted by the online accounting service for freelancers and small businesses, the Freelancer Report 2009 aims to capture the common financial experiences and attitudes of small businesses and freelancers.

It suggests that working in, and with micro businesses is the best arrangement during times of economic instability, while new businesses are also succeeding, with companies set up in the last year doing far better than their older counterparts.

The detailed findings show 36 per cent of small businesses were very optimistic about the future with better anticipated earnings, compared with less than 10 per cent of contractors.

Working with other smaller businesses is also more profitable as nearly half the respondents who have large companies as clients (those with more than 500 employees) thought their earnings would go down this year, compared with fewer than a third who do not work with those kinds of clients.

Put alongside companies up to and beyond 10 years old, businesses set up less than a year ago have been impacted least by the credit crunch, the best anticipated earnings and are the most optimistic for the future.

On the whole, despite the negative financial climate, two-thirds of contributors reported that their business income has either stayed the same, slowed a little or in some instances has even increased.

Looking at sector specific results, 60 per cent of respondents in graphic or web Design thought that business this year would be the same or stronger than last year, compared with only a third of those in IT/business consultancy, journalism or finance/accounting.

Respondents were also twice as likely (28 per cent) to be very optimistic about the future of their businesses if they used online accounting software than if they left all the numbers to their accountant (14 per cent).

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