North West SMEs bullish about business prospects
The North West small business sector is planning to increase investment, particularly in assets.
New research by Paragon Bank, which has a key North West presence, has identified growing expectations for cashflow to improve – leading to increased investment by businesses in their operations.
Published in ‘An SME Led Recovery’, the first in a series of quarterly research reports that will track the sector, the survey details the performance, plans and ambitions of SMEs, highlighting the central role they play in the regional economy.
As part of the research, specific data on the North West was collected, providing insight into the position of SMEs across the region.
Conducted for Paragon by Opinium, the research found that 47% of North West SMEs predict that their cashflow will improve over the next three months, rising to 60% over the next six months and 70% over the next year. Only 23% had seen their cashflow increase over the previous three months.
Similarly, turnover is also set to improve – 45% of North West businesses reported increased turnover during the first quarter of the year, with 60% expecting turnover to improve further during the second quarter, compared to 23% that forecast a fall.
More than a third of North West SMEs (40%) will use the increased cashflow and financing to continue investing in their businesses, with 49% planning to maintain current investment levels and only five per cent expected to reduce spending.
Machinery and equipment lead the planned investment of SMEs, with 35% and 28% of all SMEs planning investing in each, respectively.
The renewed investment will also see 21% of North West SMEs investing in electric vehicles over the next six months – higher than the proportion set to in invest in traditional fuel vehicles, with the number of firms in the region investing in LCVs falling to nine per cent. Proposed investments include:
- Machinery: 35% > 35%
- Equipment: 28% > 28%
- Recruitment: 21% > 21%
- Electric Vehicles: 21% > 21%
- HGVs: 14% > 14%
- LCVs 19% > nine per cent
The region’s SMEs have expressed confidence in the prospects for their own businesses and the sector in which they operate but were less confident about the macro environment.
More than half said they were confident in their own business (58%) and their sector (51%) in the next three months, compared with only 23% who expressed confidence in the wider UK economy.
The research also found that 44% of North West SMEs sought additional financing over the past three months, with 48% of those businesses seeking more than £100,000.
While nine per cent of this group received no additional financing, 26% received all the financing they sought and a further nine per cent secured a partial amount.
Ashley Butterfield, Paragon’s regional director for the region, said: “Our new research finds that North West SMEs are ready to deliver renewed growth for the regional and national economies. After facing the challenges of recent years, they are continuing to invest and, thanks to improved cashflow and turnover, are confident about the prospects for their businesses and the sectors in which they operate.
“That firms in the region are also looking to secure new investment is a further positive indication. Through acquiring new equipment, machinery, and vehicles, SMEs can increase the range of services they provide to customers and improve the efficiency and cost-effectiveness of their own operations.”
