New research from Close Brothers revealed that with concerns over slower growth from the UK economy, as well as barriers that threaten to hold businesses back over the course of 2018, Britain’s small and medium-sized enterprises are deeply anxious about the prospects for their businesses.
The latest quarterly indicator of business sentiment by the Close Brothers Business Barometer demonstrated that 52% of SMEs are predicting static growth, while 17% expect their business to develop over the next 12 months. However, 20 % state they don’t know how the year will turn out, underlining the heightened levels of uncertainty facing many businesses.
Due to the lack of assurance from the broader economy, 19% of SME’s feel confident that there will slight increase in the UK, while 14 % fear a further decline.
Among an extensive range of barriers that face SME’s ability to grow over the next year, the most challenging are competition in the marketplace, and economic conditions. These are followed by the inability to invest in staff or equipment, the high cost of finance, restricted cash flow and regulation as factors for lack of growth.
With only 22% of firms intending to seek funding for business investment during 2018, and just 25% planning to take on new staff during the year ahead is cause for concern as businesses are reluctant to take on additional risk.
The Government’s Brexit negotiations, continuing to cloud firms view of the future. Close Brothers’ research is in line with other indicators of SME sentiment illustrate a mixed outlook for growth amid ongoing volatility and uncertainty. For example, the Federation of Small Business recently warned that confidence amongst smaller businesses in the UK has fallen significantly in recent months, with relatively few firms seeing any prospect of a near-term improvement.
During the last three months of last year ahead of economists’ predictions the UK economy grew by 0.4 per cent with dominant services sector performing particularly stronger. Nonetheless, 2017 was the weakest year for the economy since 2012, with growth coming in at just 1.7 per cent, down from 1.9 per cent in 2016.
In a recent Financial Times poll of more than 100 economists predict that going forward they expect the weak growth to continue for UK economy. Fewer than half predicted the UK economy would expand by more than 1.5 per cent this year, while the Office for Budget Responsibility is anticipating 1.4 per cent for 2018 as a whole.
The latest Close Brothers Invoice Finance Business Barometer reflects this slow progress with only 19% of SMEs say business is improving, while a further 19% say they see opportunities but don’t have access to finance to exploit them. By contrast, 39% of SMEs say business has not improved since a year ago, while 14% deterioration and may be forced to shut down.
SMEs will therefore face the difficult year ahead, while they will need to be ready for growth opportunities that do present themselves, they should also be wary of taking undue risk. A strong balance sheet will prove invaluable in this context, providing SMEs with the means to weather any storms that materialise while keeping one eye open for better weather.
One area that should be of paramount importance is dealing with late payment and non paying customers. Pragmatic measures ensure a business gets paid by utilising a Professional Debt Collection Agency to support growth plans.