SMEs prudently optimistic of a return to the ‘boom’ years
Confidence has returned to the SME market, with business outlook over the next three months the strongest indicator yet that British business is beginning to ‘boom’. The latest research from Hitachi Capital’s quarterly British Business Barometer, found that, quarter on quarter, small businesses are no longer aspiring to just ‘stay the same’, but are looking towards growth, with 43% of small businesses in the UK looking to grow in the next three months, a 9% increase on the 32% reported 6 months ago, and 7% increase (36%) on the same period in Q1 this year.
With SMEs breathing life back into the British economy across a number of different industries, certain sectors are leading the way more than others, with confidence at a high in the Construction, Transport & Distribution and Manufacturing sectors in particular. At a time when the country is waiting to find out what the new Conservative Government will do for them, it appears that small businesses are not playing the waiting game and are pushing ahead with their ambitious plans, perhaps in the hope that the new Government will stick to their electoral promise and support and invest in British Business for the future.
The research from Hitachi Capital Business Finance’s quarterly British Business Barometer, asked 1,000 small businesses in the UK, what their business outlook is for the next three months.
Looking to the future
Sit and Wait: With 43% of small businesses intending to grow their business over the next three months, the number of businesses saying that they will stay the same or report no change has also fallen steadily over the last six months. 39% of businesses this quarter said that they will stay the same, a fall of 8% on the same period in Q1 (47%) and down 9% on six months ago (48%).
Delivering on time: Small businesses in the Transport and Distribution sector have a more positive outlook that any other sector over the next three months, with 10% of businesses in the sector reporting significant expansion in the next quarter, a 5% increase on the Q4 2014 figure (5%). Furthermore, almost one in two (49%) businesses in the sector reported that they would achieve some form of growth over the next quarter, a 24% increase on last quarter’s figures (25%) and the 35% reported in Q4 2014. Staying the same is no longer an option for businesses in this sector, with only 23% saying that they will stay the same, a huge decrease on the 67% of businesses who said there would be no growth in Q1 this year.
Building blocks: With general outlook for the Building and Construction industry at an all-time high Hitachi Capital’s Business Barometer research suggests that, over the shorter term, small businesses in the sector are prudently optimistic of growth, possibly suggesting a cautious return to growth, with only 3% predicting significant growth over the next three months, and 38% predicting some type of organic growth over the same period. In a further indication that businesses in this sector are gearing themselves up for a brighter future for their business, over one in two (52%) businesses in the construction industry said that they would be concentrating on keeping things the same over the next three months, suggesting that they are taking a cautious approach to growth in the short term.
Manufacturing success: With the Manufacturing sector ring-fenced as the country’s stronghold during economic recover, confidence in the sector is high, with growth increasing from quarter on quarter, with Q2 this year the strongest yet. 43% of businesses in the sector optimistic of growth, compared with 39% in Q1 2015 and 28% in Q4 2014.
Ploughing Ahead: In contrast to the positive outlook amongst other sector, confidence within the sector is lower than other sectors, possibly suggesting that recurring issues such as Bovine TB, the farm payment system and volatility of milk prices preventing farmers from achieving sustainable growth for their business. Only 18% of businesses within the agricultural said that they would achieve some sort of growth over the next three months, a decrease on the 25% in Q1 this year.
Gavin Wraith-Carter, general manager at Hitachi Capital Business Finance said: “While many in the industry were taking a ‘pause’ to see what the general election would bring, for the millions of Small Businesses in the UK, it would appear that it is not just ‘business as usual’, there is a strong willingness to grow and continue growing for the future. Our research shows that there are early signs that businesses are continuing to build in confidence and that this positive outlook is broadening out across the sectors. As the economic recovery continues to take shape, eventually, the focus will shift more towards business investment as a means of achieving long-term growth. At Hitachi our aim is to stand shoulder to shoulder with business owners. We want to help them achieve their growth ambitions – tailoring the right financial solutions to help them achieve their goals.”
