Region’s SMEs are preparing for investment – according to research
South West SMEs are ready to ramp-up investment, with fresh spending on assets – according to new research.
A survey of SMEs by Paragon identified growing expectations for cashflow to improve – leading to increased investment by businesses in their operations.
The first in a series of quarterly research reports that will track the sector, An SME Led Recovery 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 South West was collected – providing insight into the position of SMEs across the region.
Conducted for Paragon by Opinium, the research found that 37% of South West SMEs predict that their cashflow will improve over the next six months – and 47% expect an increase over the next year.
Only 29% had seen their cashflow improve over the previous three months.
Similarly, turnover is also set to improve – 39% of South West businesses reported increased turnover during the first quarter of the year, with 50% expecting turnover to further improve further during the second quarter compared to 29% that forecast a fall.
Over a third of South West SMEs (42%) will use the improved cashflow to increase investment in their businesses, with a further 42% planning to maintain current investment levels and only 13% expected to reduce spending.
Equipment and machinery lead the planned investment of SMEs, with 45% and 37% of all SMEs in the region planning to invest in each respectively.
The renewed investment will also see 26% of South West SMEs investing in electric vehicles over the next six months – higher than the proportion set to in invest in traditional fuel vehicles, alongside a small reduction in those firms investing in HGVs.
South West 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. Half said they were confident in their own business (50%) and their sector (50%) in the next three months – compared to only 21% who expressed confidence in the wider UK economy.
The research also found that 39% of South West SMEs sought additional financing over the last three months, with 60% of those businesses seeking over £100,000.
Of those SMEs that applied for financing, 13% received all the financing they sought and a further 26% secured a partial amount.
Peter Pike, Paragon’s regional director, said: “As our new research has found, South West SMEs are confident and are ready to invest. This is highly positive news, not just for the region but for the wider national economy. By expanding their operations, SMEs have the potential to provide customers with a wider range of services and drive forward growth.
“Recent years have presented SMEs in the region with challenge upon challenge, but their determination has proven vital in protecting the economy and will play a central role in national recovery.”
He added: “For SMEs in the South West to continue delivering, it is essential that they are able to access funding that supports their growth plans. As a SME lending specialists, Paragon is proud to work with firms throughout the region to develop flexible financing solutions that help them acquire the assets they need. By doing, we can work in partnership to unlock the potential of SMEs and achieve results that will boost the economy of the South West and beyond.”
