The future looks bright for UK SMEs, reveals Azets inaugural SME Barometer
Azets, the UK’s largest regional accountancy and business advisors to SMEs, has today launched its inaugural SME Barometer findings.
The research, which surveyed 760 Azets SME clients across the UK and the Nordics (401 in the UK), revealed that despite the economy, Covid-19 and competition ranking in the top three threats for UK SMEs, 68% feel positive about the UK’s economic outlook over the next 12 months and over half (56%) expect their profits to increase. Brexit remains firmly on the agenda where it was named as the third biggest threat in all regions outside London and South East.
There are further positive signs for SME growth and jobs with over half (56%) expecting to recruit more staff over the next year and 60% intending to invest over the next year.
Businesses in Scotland, the North East, North West and Yorkshire and Humberside are less optimistic than their counterparts further south about the economic outlook in general. 71% of London and South East SMEs feel positive about the UK’s economic outlook, in comparison to 60% in Scotland and 59% in the North East, North West and Yorkshire and Humberside. However, overall the future for UK SMEs looks bright with 87% saying they expect to be trading in a year’s time. 6% said they’re unlikely to be trading and 7% were unsure.
As the UK went into lockdown last year, the government stepped in to support businesses during the pandemic. On balance across the UK, SMEs felt well supported (71%).
Peter Gallanagh, north regional CEO of Azets, said: “There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. The disparity in optimism between Scotland/North and the South reflects the heavy weighting towards the service sector in the South, which is showing stronger and faster signs of recovery. Hopefully recovery in confidence in Scotland and the North will accelerate as the economy strengthens across the regions, entrepreneurs start to invest and employment increases.
“Clearly there are wider challenges with shortages of skilled labour, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities.”
Other key findings from the report:
- UK SMEs ranked (in order) their business models, the economy and international trade as their top three opportunities.
- Financial health, adapting their business models and employee wellbeing were ranked as the top three priorities by UK SMEs.
- 73% of UK SMEs intend to bring back all staff from furlough.
- Only 20% intend to borrow over the next year.
- 34% of UK SME business leaders say they have a poor work/life balance with 30% saying they spend over 13 hours a day working on or thinking about their business.
- UK SMEs risk being left behind in the race to net zero with sustainability and net zero commitments ranking ninth out of 11 in terms of priorities for the next 12 months.
Chris Horne, group CEO of Azets, concluded: “Our first SME barometer was conducted against an unusual backdrop. After a year of deep crisis and upheaval; with the vaccination programme accelerating across Europe and lockdown restrictions beginning to ease, the prospect of an economic recovery feels within our grasp. At the same time, plenty of uncertainty remains. Our research highlighted a stubborn optimism among SMEs about the prospects of recovery, coupled with a pragmatic awareness of the need to adapt to the ‘new normal’ post-covid.
“The biggest opportunity and biggest threat for SMEs is adapting their post Covid business model using technology and flexible working. Those who get this transition right will be in a better position to survive and thrive. Given the importance of ensuring that the SME sector continues to adapt and prosper as the economy recovers, these findings point to areas where further government policies are vital in delivering the support businesses need post Covid and post-brexit, right across the UK.”
