SMEs confidence grows with optimism for year ahead

After a challenging few years, SMEs’ confidence is growing according to new research by Shawbrook. Close to 9 in 10 (86%) of SMEs reported feeling confident about their business prospects, with a quarter (27%) saying they felt extremely confident. In comparison just 4% admitted to not feeling confident at all.

Shawbrook’s research also highlighted economic uncertainty and political uncertainty as top worries, with over half (66% and 51% respectively) citing them as a key concern. However, with a new Government in place, macroeconomic conditions improving, and the prospect of an interest rate cut on the cards later this summer, these may not present as much of an issue to businesses as they did before. Instead, many SMEs are now turning their heads to the next 12 months. With 46% experiencing growth last year, up 29% from Shawbrook’s previous 2023 research, ambitious plans are on the cards for many.

Increasing profitability is the key priority for SMEs in 2024 (52%), with improving productivity (51%) and managing rising costs (50%) also key priorities. In addition, managing their teams is also a high priority for business owners with 47% focusing on upskilling their existing team, 44% on recruiting new talent and growing the new team and 39% on retaining their existing team.

Business owners are also considering how to expand and develop their business. 32% are looking at digital transformation of their business and 29% are considering expanding into new markets or exporting. 16% were thinking about acquiring a new business in the next year, and 13% are planning to consolidate their own business. In addition, net-zero targets are becoming an increasing priority for 27% of business owners.

However, Shawbrook’s research highlighted that funding issues are weighing heavy on some SME leaders’ heads, with 51% saying that access to the right funding to suit their growth plans was a key concern.

Neil Rudge, chief banking officer for commercial at Shawbrook, comments: “With the inflation rate settling back to normal, and a rate cut expected from the Bank of England later this summer, SMEs are now focusing on the future.

“The last few years have been challenging, so it’s encouraging to see confidence return, with an overwhelming number of business leaders feeling confident for the future.

“At Shawbrook, we’re seeing demand for funding increase, as businesses start to consider their growth plans, which may have been on hold. Finding the right funding solution is an important focus for business leaders, to ensure they can unlock the potential of their businesses moving forward.

“The fact that so many SMEs have concerns over accessing funding, shows that there’s more the industry can do to support businesses. Working with a specialist lender who has the experience and resources to offer a high level of service and bespoke packages will ensure businesses can find the right finance for their plans.”