The proportion of firms expecting growth far outweighs the minority that expect their annual turnover to shrink. The findings were debated by a panel of small business leaders including Rhydian Lewis, co-founder of Ratesetter, and recent Veuve Clicquot award winner Jenny Dawson of Rubies in the Rubble.
SMEs report a number of key hurdles standing between them and growth, with the top three being concerns over the sustainability of the economic recovery, external regulations hindering productivity and lack of support from banks/government.
Attitudes towards economic recovery varies according to the size of firm and the sector in which it operates, with rising consumer confidence taking time to filter through the market. Mortgage brokers and financial advisors are far more optimistic of growth than their peers at independent retailers. Similarly mid-sized firms employing over 100 were a third more likely to express confidence in their turnover increasing over the next 12 months than those at smaller firms with just a few employees.
Howard Kerr, Chief Executive of BSI commented: “Confidence in an improving economy is being felt ever more strongly across British enterprise, but this needs to be matched with a confidence in capability. Chasing growth means making tough choices on whether the benefits of expansion outweigh the risks. Small firms must ask themselves whether they possess the confidence to chase excellence rather than settling for mediocrity.”
Following encouraging UK economic data, the research reveals that more than half of SMEs are expecting increased domestic sales to help boost their balance sheets, anticipating heightened demand from both existing and new customers. A further fifth (20%) are looking to access overseas markets for the first time, while a similar proportion intends to grow their existing overseas markets. Just one in ten SMEs view access to finance as a priority in achieving growth, with twice as many interested in extending their sales overseas.
SMEs report that hopes of trading internationally are pinned back by a lack of contacts, knowledge and talent. Amongst the smallest firms this replaces a shortage of working capital as the top barrier to international trade. Developing a solid business case for expansion is a daunting prospect for many small firms due to the range of considerations. Factors include obtaining capital, international credibility, export logistics and resilient operational plans.
Kerr concluded: “The Chancellor’s ambition to double the value of UK exports by 2020 requires a sea change in attitudes amongst small firms to overseas markets. Currently just a fifth export overseas, despite a recognition of the benefits to be gained. Adoption and certification to internationally recognized standards can never be the whole answer, but it can help build confidence and trust, as well as unlocking new opportunities. Management Systems Standards such as ISO 9001 have helped countless small firms demonstrate a commitment to delivering quality products and services, while others have showcased environmental efficiency and information security credentials.”