Data from business advisor Azets’ inaugural ‘SME Barometer’ findings reveals a positive outlook among UK firms.
The research, which surveyed 401 UK SMEs - and 359 in the Nordic region - revealed that despite the economy, Covid-19 and competition ranking in the top three threats for UK SMEs, 68% feel positive about the UK’s economic outlook over the next 12 months, and over half (56%) expect their profits to increase.
There are further positive signs for SME growth and jobs with over half (56%) expecting to recruit more staff over the next year and 60% intending to invest over the next year.
Businesses in Scotland, the north east, north west and Yorkshire and Humberside are less optimistic than their counterparts further south about the economic outlook in general. 71% of London and south east SMEs feel positive about the UK’s economic outlook, in comparison to 60% in Scotland and 59% in the north east, north west and Yorkshire and Humberside.
However, overall the future for UK SMEs looks bright with 87% saying they expect to be trading in a year’s time. 6% said they’re unlikely to be trading and 7% were unsure.
Peter Gallanagh, north regional CEO of Azets, said: “There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. The disparity in optimism between Scotland/north and the south reflects the heavy weighting towards the service sector in the south, which is showing stronger and faster signs of recovery. Hopefully recovery in confidence in Scotland and the north will accelerate as the economy strengthens across the regions, entrepreneurs start to invest and employment increases.
“Clearly there are wider challenges with shortages of skilled labour, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities.”
Other key findings from the report were that: 73% of UK SMEs intend to bring back all staff from furlough; only 20% intend to borrow over the next year; 34% of UK SME business leaders say they have a poor work/life balance with 30% saying they spend over 13 hours a day working on or thinking about their business; UK SMEs risk being left behind in the race to net zero with sustainability and net zero commitments ranking ninth out of 11 in terms of priorities for the next 12 months.
Chris Horne, Group CEO of Azets, concluded: “The biggest opportunity and biggest threat for SMEs is adapting their post Covid business model using technology and flexible working. Those who get this transition right will be in a better position to survive and thrive. Given the importance of ensuring that the SME sector continues to adapt and prosper as the economy recovers, these findings point to areas where further government policies are vital in delivering the support businesses need post Covid and post-Brexit, right across the UK.”