SMEs look forward to growth over next five years

UK small and medium-sized businesses are predicting an average increase in turnover of 37 per cent over the next five years, research finds. 


UK small and medium-sized businesses are predicting an average increase in turnover of 37 per cent over the next five years, research finds. 

The smaller businesses are the most optimistic, forecasting an average increase in turnover of 69 per cent, compared to medium-sized businesses which are predicting an average increase in turnover of 25 per cent over the next five years, according to the Santander Corporate & Commercial Business Growth annual survey.

More than half (52 per cent) of business owners are confident enough to focus on organic growth as the most important immediate short-term priority.

The findings also show companies are keen to retain key staff as the economy picks up, with nearly one in three (31 per cent) businesses stating that retaining existing staff is a priority in the short term.

The survival of their business, which was the top short-term priority in 2014 (57 per cent), is now a priority for 30 per cent of SME leaders, suggesting more companies are now focusing on growth.

More than a quarter (27 per cent) of respondents say they are focused on introducing new products while nearly a fifth (18 per cent) say they are looking to hire new staff, compared to 12 per cent who are prioritising this in 2014.

This improving business confidence is leading to more companies looking internationally for growth than any point in the last four years. Nearly one in five (18 per cent) describe international expansion as the ultimate aim for their business compared to 6 per cent in 2014.

Nearly a third (29 per cent) of SME decision makers in London are planning international expansion, compared to just one in ten (12 per cent) of SMEs in the East Midlands. 

Regional growth (28 per cent) remains the most popular overall business aim, with selling the business (11 per cent) also a popular choice.

Despite the strong optimism and renewed business confidence, businesses still report facing challenges. A tough trading environment is seen as a challenge to growth by businesses, cited by 27 per cent of respondents, although this is down from 47 per cent in 2014.

The ability to hire and retain the right staff also remains a challenge, cited by 17 per cent of business owners, compared to 14 per cent in 2014.

Access to capital (11 per cent) is another concern reported by SMEs; however, the number reporting this as a challenge is down significantly from previous years (25 per cent in 2014; 26 per cent in 2013).

Mike Reeves, joint managing director of SME Banking at Santander says, ‘It’s extremely encouraging for UK plc that SMEs, the lifeblood of the economy, are predicting strong growth over the next five years.

‘It is particularly promising that nearly a fifth are focused on international expansion, as exporting our products and services overseas is key to ensuring a stable, resilient economy.’

SMEs working in the hospitality and leisure industry are the most optimistic in terms of different business sectors, predicting an increase in turnover of 99 per cent over the next five years. This is closely followed by retailers, who predict 85 per cent. 

In terms of the regional picture, SMEs based in the East Midlands are the most optimistic, predicting an average increase in turnover of 109 per cent over the next five years. SMEs in the North West and South East are the most conservative, forecasting 14 per cent and 18 per cent growth respectively.

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