While 2016 has, for some, been the year of years to worry about market turbulence and instability – the proportion of UK SMEs that bemoan external barriers to growth has actually fallen in the last 12 months.
While many think tanks and major international brands have commented on the apparent negative impact of Brexit – and the associated tax, economic and regulatory impact, market turbulence, not to mention rumours of companies leaving the UK – the position with the SME sector seems remarkably different.
New nationwide data from the Hitachi Capital British Business Barometer, which significantly tracks small business outlook, reveals that 72 per cent of SMEs report barriers to growth since October, up from, 77 per cent.
The proportion of businesses flagging general market uncertainty as a problem remains unchanged, despite 2016 being a year of volatile political and economic events.
The findings suggest a greater resilience and agility exists among the SME community, who could well become the flag carriers for the UK business community as it responds positively to the UK’s new place in the world economy.
Despite these relatively heartening year-on-year findings, the new Hitachi Capital data suggests it is the country’s fledgling businesses (those trading for less than five years) that are most likely to be experiencing barriers to growth (73 per cent).
In the months after the EU Referendum vote, where London stood at odds with much of the country at large. The new data reveals SMEs in London were those most likely to cite factors holding their business back (76 per cent) and to report worries over macro market uncertainty (31 per cent), red tape and regulation (17 per cent) as well as uncertainty over their own business’s future (18 per cent).
Industry sector highlights
SMEs in the manufacturing sector and retail were those most likely to cite one or more factors holding their business back (83 per cent and 85 per cent respectively). Those in the manufacturing sector were most likely to express concern about macro market uncertainty (32 per cent), the value of sterling (20 per cent) and the challenges of having old or out of date equipment (16 per cent).
Small businesses in the retail sector, where margins are often tight, were the most likely of all the sectors surveyed to express concern over the impact of volatile cash flow (18 per cent) and high bank fees (11 per cent).
In the construction industry, where two in three businesses mentioned one or more obstacles to growth (67 per cent), concerns were most strongly felt over the cost of finding skilled labour (21 per cent) and the issue of late payment from clients (25 per cent) – both bigger issues here than in other sectors polled.
Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance, thinks that, without question, 2016 has been a year of monumental events and market turbulence and whilst this does create uncertainty, it would be wrong to presume uncertainty is always a bad thing.
He adds, ‘Many are seeing it as an opportunity and the task for our sector is to back this spirit of enterprise with the right support. The next few years could well be a golden age for Britain, as the nation’s smaller ventures demonstrate the positivity, tenacity and innovation that is required to grow businesses at a time of change.’
Further reading on Brexit
