Only 59% of SME owners confident about general outlook for 2017

Only 59% of SME owners are confident about the general outlook for this year, according to a survey by Top Ten accounting firm Moore Stephens.

Moore Stephens’ survey of owner managed businesses (OMBs) found that confidence levels, and performance against key business metrics have fallen to three year lows.

OMB confidence about the general outlook for 2017 is down from 77% last year, and 80% two years ago.

Confidence in meeting revenue and profit targets have also fallen to 69% and 62% respectively – down from 73% and 68% last year.

The survey also identifies a continuing downward trend in terms of year-on-year improvement, with 59% of OMBs expecting 2017 to be a better year than 2016 – down from 66% last year, 68% two years ago, and 76% three years ago.

Many OMBs performed better than expected over the last year, despite the uncertainty caused by the EU referendum. Among those surveyed, 40% said their business performed better than expected in 2016 – reversing the downward trend seen in Moore Stephens’ previous two surveys.

One in five OMBs did, however, perform worse than expected, with the 20% figure representing a three year high – up from 18% last year and 14% two years ago.

Despite the fall in confidence for the coming year, OMBs plan to continue to invest in their businesses in 2017, with more than half (51%) certain or very likely to expand their UK customer base, while only 17% intend to increase export activity.

Investing in staff training and launching new products or services (both 44%) are also among the investment priorities identified by business owners.

Suk Aulak, partner at Moore Stephens in Birmingham, said: “General uncertainty over the future has resulted in OMBs’ outlook and business performance potential falling to a three year low in our survey.

“How OMBs perform is vital to the national economy, and the good news is that OMBs are still confident about hitting profit and revenue targets in the medium term, with the majority expecting turnover and net profitability to increase in the next three to five years.

“However, our survey finds continued uncertainty amongst OMBs, particularly about the strength of the UK economy post-Brexit and the on-going UK skills shortage.

“Nearly a quarter of those surveyed also report concerns about cyber security and data privacy, recognising that breaches can have damaging consequences, not just for their own business but for their customers too.

“Even so, business owners appear pragmatic about the UK’s economic prospects over the next 12 months. Although many OMBs will seek continued cost reduction, many will be creating new products, expanding their UK customer base and spending more money on staff training and marketing.”

Moore Stephens revealed the findings at its OMB report launch event at the Radisson Blu Hotel in Birmingham.

The launch included an economic outlook report from Darren Ruane, Head of Fixed Interest at Investec Wealth and Investment.

For the full Moore Stephens report go to http://www.moorestephens.co.uk/sectors/owner-managed-businesses/owner-managed-business-report/strength-amidst-uncertainty-2017/key-strategies-for-the-year-ahead.