New research from uSwitchforBusiness.com suggests that a feeling of optimism is growing among SMEs. The research reveals that over four in ten SME owners (42%) report seeing some signs of economic recovery, with a further 1% saying that these signs are strong.

The findings also reveal a small increase in the number of small businesses confident that they will survive, with 81% now of the belief that they will get through the downturn, compared with 76% in the first quarter of this year.

However, small business owners still expect the recession to have a long lasting impact. Over a quarter (27%) say that it will take their business between six months and a year to get back to normal again, while 26% say that it will take them more than a year. Nevertheless, 32% say it will only take up to six months to recover with 14% of these saying it will take them no time at all to get back on their feet.

The uSwitchforBusiness.com SME Confidence Survey, from which the findings are draw, also shows that despite increased optimism, 58% of small companies are finding trading conditions difficult (59% in Q1). However, there has been a small increase in those saying that current trading conditions are OK (40% compared with 38% in Q1).

Earlier in the year, cutting costs was the biggest issue for SMEs and this remains the case today with 58% of companies actively looking for ways to cut back. Similarly, the number of small companies reporting a drop in demand remains unchanged from Q1 (34%). However, 35% are now experiencing cashflow concerns (up from 33%) making cashflow the second biggest concern facing SME owners today.

Jake Ridge, small business expert at uswitchforbusiness.com, said:

“Despite having the odds stacked against them, Britain’s SMEs have battled to stay afloat and to survive the recession. It has meant making tough decisions and inevitably most small businesses have felt some pain, whether having to lay off staff, find ways to cut costs or learning to combat cashflow concerns. In the first quarter of 2009, 59% were looking for ways to cut costs and this strategy seems to have paid off as most small businesses are now feeling confident about surviving this downturn.

“Small business owners are not feeling complacent though – 43% can see signs of recovery but they know they are not out of the woods yet. They are continuing to keep a tight lid on costs and know that the next challenge comes at the end of the recession when they begin the task of building their businesses back up again.”