The second ISME quarterly trends survey said that the level of investment by firms fell slightly in the last three months but more companies anticipate increasing their investment levels over the next 12 months.
The small business group said the environment is still “extremely tough and demanding,” with two thirds of companies saying the future viability of their business is under threat.
The main areas of concern are economic uncertainty, reducedorders, access to credit and late payments.
One-in-four firms are more optimistic about their prospects, which is a large improvement on the previous quarter.
The current business environment was viewed as “poor” or “very poor” by half of respondents.
ISME head of research Jim Curran said: “While the level of investment is down on the previous quarter, the indications are that companies will increase investment over the next 12 months. Exports are starting to increase, with values up on the previous quarter, primarily due to the weakness of the euro.
“On the flip-side there is still a significant level of uncertainty, with companies still faced with increasing business costs, a lack of accessible credit and ever-increasing late payments. Consequently, revenues and profits are continuing to decline for many companies, with a further deterioration anticipated.”
ISME said many small firms are only “hanging on by their fingernails”.