Open for business: SMEs unlock growth potential by focusing on new horizons
UK businesses are significantly changing the way they strive for growth, with SMEs changing their focus from tighter management of financials to a heavier focus on diversifying their business and looking towards new markets to achieve growth. The latest findings from Hitachi Capital’s quarterly British Business Barometer, found over one in four (28%) SMEs are now looking to alternative markets to achieve growth, a 13% increase on six months ago and an 8% increase on Q4 2014.
While the constant strain of red tape, regulation and ‘fixed costs’ placed on UK businesses is well documented, Hitachi’s research suggests that businesses are slowly waking up to the realisation that too narrow a focus on the financial aspects of running a business will ultimately restrict growth.
While keeping fixed costs down is still the most significant barrier to growth for over one in two businesses (53%), the change by quarter in the number of businesses looking to new markets is perhaps indicative of the need for a more strategic approach to growth. In a further indication that businesses are looking to the future, over two in five (22%) businesses will be looking to hire more people in the next three months to achieve growth, a 6% increase on six month ago (16% Q1 2015). Furthermore, 20% of SMEs will be looking to further support expansion by investing in new equipment for the business, a 7% increase on Q1 2015.
The research from Hitachi Capital Business Finance’s quarterly British Business Barometer, asked 1,000 small businesses in the UK, what they are doing to try to achieve business growth in the next three months compared with Q1 2015 and Q4 2014.
Sector highlights:
Construction: Keeping fixed costs down is the biggest priority for the construction sector this quarter (47% compared to 26% in Q1 2015). Over one in three (35%) businesses in the sector will also be focusing on being stricter on being paid by clients, compared to 11% in Q1 2015. Furthermore, 29% believe that improving cash flow will be key to achieve business growth (29% compared to 14% Q1 2015).
Manufacturing: Similar to the construction sector, over three in five (62%) businesses in the manufacturing sector will be focusing on keeping fixed costs down, compared with two in five (41%) in Q1 2015. Expansion into new markets is also key to growth, (38% Q3 2015 compared to 25% in Q1 2015).
Gavin Wraith-Carter, general manager, Hitachi Capital Business Finance, said: “At Hitachi Capital, we are committed to helping businesses grow and it is encouraging to see that a key priority this quarter is towards investing in the future – through hiring new staff, obtaining new equipment or evaluating the right financial funding. Keeping a close eye on finances is of course critical to building a strong business, however, the research highlights that businesses are beginning to broaden the net and are allowing themselves time to focus on how the business needs to move forwards, extend and grow in strength. Whatever their goals, we can help guide businesses through and provide them with useful solutions that will help them focus.”
