ALMOST a third of Midlands companies plan to reinvest at least 6% of turnover back into their business for commercial growth next year, according to new research by Yorkshire Bank.
However, the survey also found that 40% of companies in the region said nothing had been earmarked for growth.
The survey also found that just under half of businesses had delayed either salary increases (49%) or recruitment (44%) in the last 12 months because of the economic climate.
The areas most Midlands-based companies believe will drive commercial growth include more staff – which more than a third identify as the top priority along with new equipment and machinery (34%) and expanding their premises (32%).
Stephen Cronin, managing partner at Yorkshire Bank’s Financial Solutions Centre in Birmingham, said: “From the research it is clear businesses are telling us that their investment and capital expenditure plans remain uncertain over the next 12 months.
“The decision of when and how much cash to invest back into a business is very important. These results indicate that the majority of businesses are planning a relatively conservative spend in the next 12 months.”
However, he said with growing confidence among businesses, the time may well be right for the companies to invest in growth opportunities such as bringing new products to market to pursuing potentially lucrative contracts.
Over a third of businesses in the region (42%) cited a lack of cash flow for delaying investment in the past year while 40% deemed the preservation of working capital and the perceived financial risk in the current climate (34%) as necessary reasons.
Around 15% of Midland businesses said a more flexible approach by their bank would allow their business to take advantage of growth opportunities in the next 12 months.
In response to customer demand, Yorkshire Bank recently launched a new business support initiative – Investing for Growth – which is designed to help successful businesses grow and develop by easing their cash flow pressures.
Loan repayment holidays, interest-only repayments as well as extended loan and credit facilities are just some of the flexible support options available under the Investing for Growth initiative which also includes a dedicated financial planning service.
“From our extensive customer research, we believe there is a growing demand to give businesses the flexibility and confidence to grow, while still easing cash flow pressures and debt commitments,” added Mr Cronin.
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