Market uncertainty remains the biggest barrier to SME growth
Despite growth ambitions, Britain’s SMEs continue to be held back by a combination of external macro economic factors and internal influences. Many SMEs are struggling to balance the pressures of running a business in a challenging global economic environment. One year on, market uncertainty continues to dominate the agenda and is still the main barrier to business growth every quarter (34% Q4 2015 vs. 32% in Q4 2014), according to the latest research from Hitachi Capital’s quarterly British Business Barometer.
With recent consumer confidence in China reaching an all time low and closer to home in the UK, where the devastating news of the decline of the UK steel industry took everyone by surprise, it is perhaps unsurprising that small businesses are entering the fourth quarter of 2015 with a degree of uncertainty.
The research from Hitachi Capital’s quarterly British Business Barometer, asked 1,021 small businesses in the UK what is currently restricting growth and holding their businesses back. These figures were compared with the same period 12 months ago (Q4 2015 vs. Q4 2014).
Key findings:
– Despite promises made by the government to cut red tape, to date, nothing appears to have happened and as a result, businesses are yet to feel a difference. Over one in five (22%) SMEs actually believe that red tape is getting worse.
– Late payments continue to be a major concern for small businesses, with over one in five (22%) SMEs growth ambitions, restricted due to non or late payment of invoices and bills.
– Volatile or unpredictable cash flow is a concern for 19% of SMEs, an increase of 4% on 12 months ago (15%).
– The increasing cost of labour is slightly up on 12 months ago (14% Q4 2015 vs. 11% Q4 2014).
By sector:
Manufacturing:
– Almost one in two (47%) SMEs in the manufacturing sector are feeling restricted due to market uncertainty, a 16% increase from 12 months ago (31% Q4 2014).
– For over one in three (31%) SMEs in the sector, red tape, excessive bureaucracy and regulations are a huge restriction to growth (29% Q4 2014 vs. 31% in Q4 2015). Construction:
– Within the construction industry, a third (33%) of SMEs are held back by market uncertainty; this percentage fell by 3% from the figures 12 months ago in Q4 2014, where 36% were uncertain.
– 32% of small business owners feel that they are being held back from growth due to late payments this quarter, an 8% increase from Q4 2014 (24%). Agriculture:
– With the agricultural sector again suffering more than the majority of the other sectors, red tape and market uncertainty are the two issues that are getting increasingly worse for the sector, suggesting growth is perhaps off the agenda for the short term.
Q4 2015 Q4 2014 Increase in growth restrictions
1. Red Tape (bureaucracy and regulation) 47% 31% +16
2. Market Uncertainty 46% 29% +17
3. Extreme/Unpredictable Weather 43% 36% +7
4. Volatile Cash Flow 25% 21% +4
5. Value of the Sterling/ Exchange rate 20% 12% +8
Gavin Wraith-Carter, general manger, Hitachi Capital Business Finance, said:
“All businesses, regardless of size, are striving to achieve growth and we know from our research that they remain, by and large, confident. Set against the will to succeed is the very challenging wider economic backdrop, especially for those SMEs that are exposed to volatile and unpredictable markets. We are all too familiar with the daily challenges that companies face and we understand their concerns. Hitachi Capital strive to offer the right financial solutions that will help ensure all enterprises, regardless of sector, are in a stronger position to withstand the more challenging times.”
