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An optimism index that measures entrepreneurs’ confidence about their own businesses on a scale of 0 to 100 has dropped nearly ten points to 66.7 over the past few months. Their view of prospects for their industries in general fell nearly 17 points to 51.3, according to the survey from mid-market private equity firm Bowmark Capital.

Bowmark’s managing partner Charles Ind says that entrepreneurial companies normally display more confidence than business in general, but even they have become more apprehensive as the likelihood of a recession increases. He adds: ‘The outlook for the economy in the next six months is more uncertain than at any time in recent history.’

Growth in turnover and profits has slowed at the small and medium-sized enterprises (SMEs) surveyed. In January, more than 60 per cent of respondents reported profits up ten per cent or more in the previous 12 months, but this time fewer than half saw that level of increase and a quarter had static or falling profits.

Expectations for future growth have also been reined in. Just more than half of those surveyed see revenue growing ten per cent or more over the next 12 months, down from two-thirds in January. Only one-third are planning acquisitions, down from 43 per cent.

Ind comments: ‘With merger and acquisition activity likely to be muted in the year ahead, entrepreneurial companies will be focusing on organic growth.’

The credit crunch is having an impact on SMEs. Some 84 per cent of those who have seen a change in the terms of debt for working capital say those terms have worsened.

Bowmark interviewed chief executives and managing directors of 163 UK-based SMEs with turnover of between £10 million and £100 million. The interviews were conducted in April and May.

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