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International survey provides unique insight into small business landscape across North America & Western Europe

41% of small businesses more confident than a year ago but hindered by bureaucracy and lack of funding

23rd February, 2011 - New research published by The Sage Group plc today reveals a definitive landscape of small businesses’ confidence, concerns and challenges for the year ahead. The Sage Business Index– International Small Business Insights, which surveyed 6,455 businesses across the UK, Germany, France, Canada and the USA shows an average of 41% of companies are feeling more confident about business in the year ahead compared to the same time last year. German small businesses are the most confident with 55% stating they are more positive, whilst of the 5 countries the UK is the least confident, with only 34% of respondents stating they are more positive. However, this relatively encouraging outlook is countered by, on average, 19% of businesses who feel less confident than a year ago. Furthermore, it is in marked contrast to Spanish small businesses, who were surveyed in parallel*, and who have a very different attitude with only 12% feeling more confident and 30% saying they feel less confident, with the remainder seeing either no difference or having no opinion.

The economy and employment

This cautious optimism is reflected in small businesses views’ about economic revival with on average 53% stating that they feel their country’s economy is recovering slightly or significantly. But again, demonstrating the uncertain nature of the recovery, an average of 26% of respondents across these 5 countries think their economy is declining slightly or significantly and in Spain almost half (47%) expressed fear that their domestic economy is declining significantly. However, there is some optimism amongst Spanish businesses when it comes to the global economy with 40% feeling optimistic about it recovering slightly in 2011. This echoes the views of small businesses in their European neighbours, who have similarly positive views about the global economy whilst US and Canadian businesses are less positive about the global economic recovery compared to their own.

There is relatively good news for employment with stability returning – in Germany and France far more businesses surveyed are planning to recruit than reduce employee numbers and in the other countries those who plan to reduce numbers are broadly offset by those who plan to recruit.

Hindering factors

Companies are in unanimous agreement about the factors that restrict them - irrespective of country the least favourable aspect of doing business is government bureaucracy and legislation. This is a significant counterweight to the fact that on average 48% of respondents view their entrepreneurial spirit and business culture as the most favourable thing about their country as a place to do business. Whereas US and Canadian small businesses have particularly strong views about government, citing their handling of economic challenges as the second least favourable aspect of doing business in these countries, in Western European there is a greater concern about a lack of access to funding. German, French and UK small businesses all rate this as the second least favourable aspect about doing business in their regions.

Consequently all countries surveyed rate a lessening in bureaucracy and legislation as the number one priority for government in helping businesses. In each country this is followed by a reduction in business tax, although in the US reducing national debt is given equal importance to this. In France and the UK businesses view pressurising banks to lend more as the third most important priority, in Germany it is reducing national debt, whilst 26% of Canadian businesses also rate a reduction in national debt and the creation of special assistance programs to help start-up businesses as their next biggest needs.

Business challenges and future plans

When it comes to challenges, the findings paint a compelling picture of businesses across two continents worrying about overheads, costs and revenues and knowing they have to address expenditure, grow their business and find new customers. In terms of how these challenges impact their future plans, reducing expenditure was seen as highest priority by all (around 50% cited this in each country). This was followed by monitoring finances more closely and investment in sales and marketing, which was cited as second or third by all.

From the research two countries emerged as champions of new product innovation – France and Spain. 36% of French small businesses will look to launch new products in 2011 and even more in Spain (41%) plan to do so.

The role of technology

Technology will certainly have a role to play in 2011 for small businesses across the globe, although there is a degree of reticence by some small businesses for implementing or investing in new technology and the picture is mixed across countries surveyed. However, the number one reason for increased use of technology is to “Help make their business more efficient” with well over 60% of responses in all cases.

Guy Berruyer, Chief Executive of The Sage Group said: “Our survey represents the international voice of small businesses, who are a major source of innovation and skills, contributing significantly to economic productivity worldwide. They are clearly stating that they have the appetite and drive to succeed, but whilst confidence appears to be slowly returning bureaucracy and legislation are holding them back. This, in combination with a lack of access to funding, is impacting how entrepreneurs feel about doing business right now. If their concerns can be addressed it will improve the landscape in which they operate, boost their prospects and the benefits will be felt by all.”

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NOTES TO EDITORS:

About Sage

The Sage Group plc is a leading global supplier of business management software and related products and services, principally for small to medium-sized enterprises. Formed in 1981, Sage was floated on the London Stock Exchange in 1989. Sage has 6.3 million customers and 13,400 employees worldwide. We operate in over 24 countries covering the UK, Europe, North America, South Africa, Australia, India and China. For further information please visit www.sage.com.

About The Sage Business Index.

6,455 small businesses were surveyed across Germany, France, UK, Canada and the USA during a two month period between November and December 2010. Businesses were asked a range of questions regarding such issues as current business confidence about both their own market and globally, how they feel about economic recovery, their country as a place to do business, the role of Government, what challenges they face as a business in 2011 and and the role of technology in helping them do business in the future. 76% of respondents had between 1 and 19 employees.

To download the full report, detailed data, graphics and country summaries, as well as to read and contribute to our Business Index blog and view additional content, please visit www.businessindex.sage.com

*About the Spanish Research

*Sage also conducted separate, in depth research, amongst 7,091 small businesses in Spain during the same time period. Entitled “Radiografia de la Pyme”, identical questions to those asked in The Sage Business Index research about business confidence, the economy, business advice and development were asked in the “Radiografia de la Pyme”, and the responses to these have been included in theInternational Small Businesses Insights report. The full Spanish report will be available from mid March at www.sage.es and www.businessindex.sage.com.

Contact information

For more information on The Sage Business Index – International Business Insights please contact Ralph Charlton, [email protected] or Jennie Whitell, [email protected] or call Tel: +44 (191) 294 3193 .

For press information please contact David Vindel, [email protected] or Natalie Homer, [email protected] or call Tel: 0207 0256500