UK SMEs aiming for “steady rather than ambitious” growth in 2016

Moreover, when describing their current economic outlook, over half (54%) of SMEs believe the worst is behind them and that they are confident about the steady recovery of the economy.

Commenting on the figures, Mike Randall, CEO of Close Brothers Asset Finance (pictured above) said: “With the UK economy continuing to strengthen, it is encouraging to see that a significant number of business leaders in small and medium sized enterprises are expecting to see their business expand throughout 2016.  It shows a real belief in the market and the future of their business.”

The results also found that nearly a third (29%) of SMEs in the UK are planning to seek funding for business investment in the next 12 months, with nearly a third (30%) of these businesses hoping to borrow up to £100,000 and a further fifth (18%) planning to apply for funding of more than £100,000.

Despite this, the study also showed that more than one in ten (13%) of SMEs have missed a business opportunity in the last 12 months, due to lack of available finance, with just under half (48%) of these SMEs missing multiple opportunities.

Randall added: “Our study clearly shows that investment will be key to a lot of companies in 2016, and we know from our experience in the market that many of these will be using the funding to grow their businesses.

“With this is mind, it is vital businesses understand what assets or finance are required at all times. This is to ensure no business opportunities are missed and that they successfully manage the future needs of the business. We would urge any business owners planning to apply for investment in the New Year to ensure that they regularly assess their plans and evaluate all of the financial options available to help them find the most appropriate solution to fit their business needs.”

Simultaneously, Hitachi Capital’s British Business Barometer finds evidence that although Britain’s SMEs are cautiously confident of ending 2015 in a growth phase, there are worrying signs that certainty is beginning to wane from the peak recorded in Q2 2015.

Gavin Wraith-Carter, general manager at Hitachi Capital Business Finance (pictured below) said: “At a time when the British economy has had to react quickly to the turmoil caused by China’s drastic slowdown, this might be the first sign small businesses are beginning to feel a little less secure than they were.

“Although the number of SMEs looking to grow their business has increased from last year (40% compared with 36% in Q4 2014), it is a 3% decrease on the 43% of businesses who said they would aspire to grow in Q2 this year. By sector, some industries have been hit harder than others; with the research indicating sectors such as Construction, Manufacturing and Agriculture are lacking in confidence this quarter and are cautious.

Hitachi Capital’s research asked 1,021 small businesses in the UK, what their business outlook was for the next three months and how these compared with 12 months ago in Q4 2014.

Ploughing on

Concerns amongst the Agricultural sector prevail for another quarter, with this sector the least optimistic for growth than any other sector. Growth aspirations are down quarter on quarter, with only 14% of businesses in the sector optimistic of any growth in the next three months, a 4% drop on the same period 12 months ago (18%). In contrast to the negativity of Q4 2014, where 11% of businesses in the sector were looking to scale down or struggle to survive, the majority of businesses in the sector now appear to be striving to stay the same instead (70% compared with 57% in Q4 2014).

Rocky Foundations

Outlook within the Construction sector is less optimistic this quarter, with the number of businesses saying they will grow is down 5% from 12 months ago (33% Q4 2015 vs. 38% in Q4 2014). Those looking to just stay the same has also increased significantly from 12 months ago, suggesting turmoil within the sector is changing their outlook from broadly positive to playing it safe and keeping the business steady (46% in Q4 2015 vs. 52% in Q4 2014).

Burning Bright

Despite continuing pressure on the Manufacturing sector and a weak month for the industry in September, optimism amongst the sector is still stronger than it was 12 months ago, with a 5% increase in growth compared with 12 months ago (28% in Q4 2014 vs. 33% Q4 2015).

Significant expansion is not high on the agenda and has dropped considerably by 4% in Q4 2015 compared with 7% in Q4 2014.

Wraith-Carter stressed: “Whatever the economy holds for us all in the next three to five years, one thing is evident, there is confidence in the SME market. Although confidence is not on a par with Q2 this year, problems in the EU, the steel industry and Agricultural sector in particular, will have changed the economic landscape for a significant number of Britain’s small businesses. This quarter’s more cautious attitude to growth may be a sign businesses are taking a ‘wait and see’ approach and are striving to achieve steady rather than ambitious growth. Whatever their immediate or long term plans, as a leading provider of business asset finance, at Hitachi we offer a range of financial solutions for businesses wanting to grow at their own pace.”