UK: Small businesses are hoping to beat the recession by stepping up their sales and marketing strategies, a new survey has revealed.

After cutting operating costs to the bare minimum, many smaller firms are hiring sales staff, improving their websites and boosting marketing activities in an effort to tackle tough trading conditions.

Research carried out by the Forum of Private Business also found that business owners expect their efforts will pay off. More than half (56%) of those surveyed expect to increase their turnover in 2010 and 44% believe their business will grow.

The findings are the first of the FPB's 'economy watch' panel - a body of more than 350 members who are sharing their experiences as the economy heads away from recession.

The panel is designed to provide an accurate and timely reflection of what small businesses are experiencing on the ground. Its findings will be released on a monthly basis.

The results of the first economy watch panel paint a generally positive picture, with companies expressing a defiant attitude to the downturn and only 13% concentrating on cutting costs. Eighty per cent of those surveyed described the cost of borrowing as 'affordable'.

However, business owners expect to see continuing tough times ahead. Around 60% of those surveyed expect to see the general cost of business to increase this year and an overwhelming 76% are anticipating tax increases.

Almost half (48%) of those surveyed had been required to provide personal guarantees for loans, while 26% had to secure loans, often on properties, in order to access affordable interest rates. Some members reported interest rates of more than 20% for unsecured borrowing.

Commenting on the results, the FPB's research manager, Thomas Parry, said: "These findings are quite encouraging and show there's a healthy amount of fighting spirit among smaller firms.

"We appear to be seeing an upturn in confidence among SMEs and, by investing in sales and marketing strategies, small business owners are showing determination and entrepreneurial flair.

"However, much of this optimism is based on the hope of a recovering economy and increased business and consumer confidence.

"Political, economic and currency stability are all important, with a proportion of businesses suffering from the weak pound. Also, the difficulty for businesses in terms of planning is indicated by the fact that almost one in five businesses are uncertain about the support they may want in the next month."

Mr Parry added: "Businesses currently have a relatively high level of debt, but the low base rate has made the cost of finance to be relatively affordable with 80% of the firms we surveyed stating that it was affordable.

"However, even those who felt it was affordable were concerned that when economic growth becomes more sustainable, the cost of borrowing is likely to increase."