9 September 2015 11:00
Optimistic SMEs predict 37% growth over five years
A poll of senior decision-makers in SMEs has found that they are anticipating strong growth over the next five years.
The small business managers and owners surveyed predict average turnover growth of 37%, the equivalent of £2.4 million, according to the findings of the 2015 Business Growth survey from Santander Corporate & Commercial.
And small businesses are more optimistic than medium-sized businesses, the research shows. Small firms are anticipating growth of 69%, compared to 25% for medium-sized enterprises.
Growth has superseded survival as the main focus for SMEs. In 2014, 57% cited survival as their top priority; in 2015 survival is most important to 30% of SME decision-makers.
One in five SMEs are looking to expand internationally (compared to just 6% in 2014); while 52% of business owners are focusing on organic growth as their most important immediate priority.
Regional growth (28%) remains the most popular overall business aim, with selling the business (11%) also a popular choice.
There are notable differences across the UK's regions. SMEs based in the East Midlands are the most optimistic, predicting an average increase in turnover of 109% over the next five years. Nearly a third (29%) of SMEs in London are planning overseas expansion, compared to 12% in the East Midlands.
The findings show that there have been clear shifts in the challenges facing small firms over the past few years. Just 27% had concerns about the tough trading environment this year compared to 47% in 2014. Access to capital is a problem for 11% compared to 25% in 2014. However, difficulties over retaining and hiring staff have worsened, affecting 17%, up from 14% in 2014.
The findings are supported by new research by the CBI published this week that has found that business growth expectations are strong for the next three quarter.
Rain Newton-Smith, CBI Director of Economics, said:
"The sun has certainly been shining on the British economy. The pace of growth has been energised across the sectors, and it is good news that this is set to continue as we head into the autumn."