By: Caterina Glenn

75% of small businesses believe the economy will see an upturn in 2010 according to research from BT Business, with 35% predicting an improvement by January 2010.

The 2009 Business Pulse report, with 7,200 respondents, is the UK’s largest survey of small and medium sized businesses this year. In spite of the challenging environment, 61% are confident about their business prospects for the coming year and 45% say their business operates for the better as a result of the downturn. 41% believe small businesses will innovate and diversify to create new industries as the UK emerges from the downturn.

The impact of the recession is still raw for 18% of firms who say it’s had a negative, lasting impact on business performance. 43% say they’ve lost customers, 17% say business costs are up and 16% cite an increase in debt.

The research measured the current health, drivers and inhibitors to successful UK business, to understand the full impact of the recession on small firms. Respondents were indexed by age, gender, region and industry sector and findings show that females aged 46-55 have been most affected by the recession; Northern Ireland, London and the West Midlands are the most affected regions, with the construction sector and companies with two-five employees hardest hit. Nationally 48 % of small businesses say turnover is down with nearly a quarter seeing a dip of more than 10%.

The Business Pulse identified the positive steps firms have taken to manage the downturn. Smaller organisations have been quick to change the way they operate with 45% of respondents saying that the recession has changed their business for the better by enabling them to reduce their spending (54%), better manage and retain their customers and market their business more effectively (26%).