Small businesses expect at least two more years of recession, new research suggests.

A survey commissioned by accounting software developers KashFlow, shows the average small to medium business owner expects the recession to last another year and eleven months. Some 20% of companies fear the recession will last three years or more.

Despite this bleak outlook, small businesses are in a bullish mood with 77% predicting sales growth in 2009. Over 60% of businesses intend to diversify to survive the recession, and more than half intend to increase marketing spend.

Duane Jackson, managing director of KashFlow said: “If the UK economy needs inspiration to work its way out of this recession then it should look no further than the country’s SMEs. More than three quarters of them are planning for increased sales despite the economic downturn.

“They are seeking out new business opportunities, spending more on marketing and employing more staff.”

Over 80% of businesses surveyed did not expect to lose staff through redundancy, with more than 30% claiming they intend to take on new staff.

© Crimson Business Ltd, 2009