SMEs ‘cautious’ about expansion

Many small and medium-sized businesses are reluctant to expand beyond their current size, and most have no plans to increase their spending, a poll reveals.

The research was carried out by accountancy firm Baker Tilly for its report named Your Business Outlook 2014. For it, they quizzed 750 small and medium sized businesses (SMEs) and found:

• 96% of SMEs were content with their success levels, although almost half were confident there would be opportunities to achieve business growth in the year ahead.
• 84% would not increase their debts to expand their business and just 23% said they would consider looking at finding alternative ways of funding business growth.
• Just 18% say they are planning to hire new staff in the next year
• One in five say they will probably increase their capital expenditure
• 23% were planning to spend more on sales and marketing, while 16% are increasing their budget for research and development.

These findings correspond with the Cash Surplus report we mentioned in our post ‘UK businesses are keeping hold of their cash‘.

Bravery needed for economic recovery

Neil Sevitt, Partner and SME Specialist at Baker Tilly, believes businesses need to be brave and make more courageous decisions to help secure the UK’s economic recovery.

He says: “SMEs have had a torrid time over the last half a decade and to see them emerging from the recession a little shell shocked is not surprising. Nevertheless, there is a real concern that without SMEs being prepared to invest and expand, the UK’s economic recovery will remain hesitant and uneven.”

But Mr Sevitt says that despite keeping a tight hold of the purse strings, most businesses feel optimistic about their future.

He says: “On average, 45% of businesses surveyed said they were confident or extremely confident about growth opportunities for their businesses over the next 12 months, and more than three-quarters are expecting to increase their turnover over the same period.

“However, it is far from clear where this expected growth will come from. The vast majority of the SMEs surveyed appear to be extremely cautious about investing in the resources, activities or equipment to deliver growth.”

Opportunities to grasp

Confident start-ups and SMEs could use this report as a springboard to get one up on their competitors. Businesses that know their markets and seize opportunities are likely to emerge from the downturn fighting fit.

We have a range of flexible options and offers to help small businesses expand while reducing their risks. Find the right location for you and then speak to the business centre manager for more information.