Business confidence peaks for SMEs

Study shows companies have faith in business growth over the next few years.


Study shows companies have faith in business growth over the next few years.

Businesses in the UK are at their most confident in three years about their growth potential, research finds.

According to a study by Santander Corporate & Commercial, companies are predicting turnover growth of an average 134 per cent in the next five years, equivalent to 18.5 per cent a year, and up considerably from the 88 per cent five-year growth forecast in last year’s survey.

The findings, which look at growth expectations for companies with turnover of up to £20 million, reveal businesses are predicting turnover growth of an average 134 per cent in the next five years, equivalent to 18.5 per cent a year, and up considerably from the 88 per cent five-year growth forecast in last year’s survey.

Office for National Statistics GDP statistics released in July revealed the UK economy grew by 0.6 per cent in the second quarter.

The figures are also matched by a stronger outlook for employment with around one in eight (13 per cent) companies stating that hiring new staff is an immediate priority — the highest it has been since 2011.

In a further sign of increased confidence, SMEs also report they are turning to acquisitions for growth, with the number reporting this to be an immediate priority doubling to 14 per cent this year from 7 per cent in 2012 and up from 5 per cent in 2011.

The number looking to grow organically has also risen to 32 per cent, compared with 29 per cent in 2012.

Despite the increase in optimism, however, businesses are still facing stiff challenges with half (50 per cent) of those polled reporting they are focussed on ‘survival’ as an immediate priority. This is down from 54 per cent in 2012 but higher than in 2011 when the figure stood at 47 per cent.

Marcelino Castrillo, head of SME at Santander Corporate & Commercial says, ‘Understandably, many businesses remain cautious given the current environment. However, our latest growth survey reveals the most optimistic five-year outlook for three years. It also found that since 2011 more SMEs are looking at growing both by acquisition as well as organic expansion, which we believe is positive news for the UK economy. Figures that indicate firms are increasing efforts to hire new staff are also to be welcomed.

‘Given the increase in optimism, we encourage businesses to remain focused on business fundamentals and plan responsibly for future growth. For companies that have survived the past few years of economic volatility and are well positioned to seize future opportunities, basics such as effective cash flow management, first-rate customer service and long-term strategic planning remain crucial to realising their growth ambitions.’

Hunter Ruthven

Bernard Williamson

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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