The proportion of UK small businesses with specific plans for growth has reached its highest level for three years, according to new research.
A survey of small businesses owners conducted by Novuna Business Finance has found that 71% of enterprises are currently working on specific growth strategies to improve their future prospects - up from 65% in the first quarter of 2021.
The findings indicate that across five industry sectors in particular - manufacturing, construction, agriculture, IT/telecoms and finance/accounting - there is a three-year high for the percentage of small businesses working on a growth plan. The percentage of firms investing in growth strategies in these sectors are:
- 86% of small manufacturers (up from 77% in Q1 2021);
- 75% of construction firms (up from 57%);
- 74% of agriculture businesses (up from 64%);
- 74% of IT/telecoms businesses (up from 72%);
- 70% of finance and accounting firms (up from 65%).
However, fewer small firms are confident about achieving growth in the short term. On average, just 31% of UK small firms are expecting growth in the next quarter. The most optimistic businesses are in finance and accounting, media, IT/telecoms, transport and hospitality.
"The percentage of small businesses predicting growth (31%) has been resilient in its consistency for three consecutive quarters. This new piece of research offers a clue on what might be next. If business owners are working on future growth initiatives now, we should see an uplift in the overall proportion of businesses reporting growth during the autumn and winter months." Jo Morris, head of insight at Novuna Business Finance
Strategies for business growth
The Novuna research suggests that key priorities for growth-oriented firms include: looking for help to fund new equipment (18%) and reassessing funding arrangements with lenders (12%). Keeping fixed costs down remains the top priority for 58% of respondents, while 30% are focused on improving cash flow and 26% say they are being stricter on chasing late payments. Reducing headcount is a goal for 21% of respondents.
In contrast, the prospect of securing growth by expanding overseas into new markets has hit a three-year low at 17%. Compared to much higher figures through 2016 and 2017 (consistently ranging between 25%-28%), the research suggests a disruptive legacy of Brexit on many UK small businesses.
Optimism among tradespeople rises
Also this month, data from the SME Insights Report, published by Simply Business, shows that 72% of tradespeople surveyed are feeling positive about their prospects in 2023. In addition, 39% of tradespeople believe the economy will improve, despite ongoing challenges caused by inflation.
The findings indicate that the rising cost of running a business is a top concern for 51% of tradespeople and 40% report that finding and retaining customers is challenging. Just over a quarter of tradespeople surveyed (28%) would like to see a review of the energy price cap to help ease financial burdens.
"The stoic spirit of small business owners is the backbone of the UK economy - their resilience is vital to the nation's recovery and growth," said Alan Thomas, UK ceo at Simply Business "Small businesses sit at the heart of our communities and are vital to our economy, and it is essential that we continue to support them in these times of financial uncertainty."
Written by Rachel Miller.