SMEs feeling bullish about year ahead – according to new research
South West SMEs are feeling confident about the coming year according to research from a leading funder.
The research from Paragon Bank found that 60 per cent of South West SMEs expected their first quarter turnover to be higher than twelve months ago.
Carried out by Opinium, the research also found that cashflow is also set to improve for South West SMEs during 2023, with 44 per cent predicting increases in the first half of the year.
Anticipated improvements to cashflow and turnover has led to optimism for the year ahead, with 50 per cent of SMEs confident about the future – compared with only 11 per cent with uncertainty over the next twelve months.
Confidence in their own business is also greater than that for the UK economy as a whole. Of those surveyed, only 34 per cent of South West SMEs expressed confidence on how the economy will perform – but this increased to 53 per cent when considering the sector in which they operate.
The optimism of South West SMEs in their businesses is matched by planned investment in their operations, including:
- Existing premises (90 per cent)
- Commercial vehicles investment (73 per cent}
- Machinery/equipment investment (73 per cent)
- R&D (73 per cent)
- IT/technology investment (71 per cent)
- Staff development (64 per cent)
- Fleet or director vehicles (55 per cent)
- Staff recruitment (45 per cent)
While the research findings identify both the optimism and resilience of SMEs it also identified the challenges presented by the high inflationary environment of 2022 with increases to:
- Fuel for vehicles (86 per cent)
- Raw materials (83 per cent)
- Employee salaries (81 per cent)
- Production costs (81 per cent)
- Vehicle maintenance (75 per cent)
- Employee benefits (64 per cent)
- Premises cost (47 per cent)
Peter Pike, Paragon Bank SME Lending Regional Director, said: “With expectations for both turnover and cashflow growth, South West SMEs are looking ahead with optimism. Though challenges still face the national economy, SMEs are positive about their businesses and their sectors – with plans to invest in and boost the regional economy.
“Growth will be central to our national economic recovery and it is vital that SMEs can access the financing they require to fulfil their ambitions. As a specialist lender, Paragon is ready to speak with businesses, learn about their plans, and work together to create solutions that will support them in the year ahead.”
John Phillipou, Paragon’s Managing Director of SME Lending, added: “With expectations for growth and plans to invest in their businesses, SMEs are ready to help the economy recover from the challenges of recent years. It is clear from the research data that SMEs are optimistic and resilient, and it is therefore vital that they can continue to access the financing required to support their growth plans.”
He continued: “As SME lending specialists, Paragon understands that each business is unique and requires bespoke financing solutions. By working closely with clients to learn about their circumstances, we look forward to delivering financing packages that will benefit SMEs throughout 2023 and beyond.”