West Midlands SMEs more confident about their five year growth plans
SMEs in the West Midlands are more confident about their five year growth prospects, with many predicting large increases in turnover, a new study has found.
According to the latest Business Growth survey from Santander Corporate & Commercial, firms employing up to 249 people in the West Midlands are predicting 24%, or the equivalent of £1.7m turnover growth, over the next five years.
Yet the figure is still below the national average.
The survey suggests a strong outlook for short-term growth, with just under half (48%) of those questioned saying an immediate priority was to grow their business organically. Just over a fifth (21%) wish to introduce new products or research and development and nearly a quarter (23%) plan to focus on retaining existing staff.
On a national level, senior decision makers from SMEs are predicting strong levels of growth over the next five years, with SMEs predicting average turnover growth of 37%, the equivalent of £2.4m, over the next five years.
The picture is not quite as rosy for mid-sized businesses, where firms are predicting an average increase in turnover of 25% over the next five years.
Santander said while 57% of firms had said last year that ensuring the survival of their business was their top short-term priority, this figure had now almost halved to 30%, suggesting more companies are now focusing on growth.
More than a quarter (27%) of firms said they were focused on introducing new products while nearly a fifth (18%) said they were looking to hire new staff – compared to 12% who were 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%) describe international expansion as the ultimate aim for their business compared to 6% in 2014. Regional growth (27%) remains the most popular overall business aim for SMEs in the West Midlands, with selling the business to retire (15%) and building the business internationally (13%) also popular aims.
Despite the optimism and business confidence, businesses in the West Midlands still report facing challenges. A tough trading environment was cited by 16% of firms as a major obstacle to growth. Lack of management know how (14%), access to capital (13%) and the ability to hire and retain the right staff (11%) also remain key challenges cited by business owners in the West Midlands.
Susan Davies, Regional Director, West Midlands, Santander Corporate & Commercial, said: “We are encouraged to see that SMEs in the West Midlands are forecasting growth over the next five years. The number of businesses looking to grow organically, both regionally and nationally, is very positive news for our region.”
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% over the next five years. This is closely followed by retailers, who predict 85%. Those in the construction (27%), manufacturing (19%) and IT and telecoms industries (15%) are also forecasting significant growth over the next five years.
