The future looks bright for South West SMEs
By Sophie Ladd | 10th August 2021
Azets, the UK's largest regional accountancy and business advisors to SMEs, has today launched its inaugural SME Barometer findings. Financial health, adapting business models and employee wellbeing were at the top of the priority list for businesses in the South-West, and Brexit remains firmly on the agenda, where it was named as the third biggest threat.
The research, which surveyed 760 Azets SME clients across the UK and the Nordics (401 in the UK), revealed that 74 per cent of South-West based clients feel positive about the UK's economic outlook over the next 12 months, in comparison to 59 per cent in the North-East, North-West and Yorkshire and Humberside.
There are further positive signs for regional SME growth and jobs, with just under half (48 per cent) expecting to invest in their business over the next year and 43 per cent intending to increase their employee headcount within the same time frame. Overall, the future for UK SMEs looks bright with 87 per cent saying they expect to be trading in a year's time. 56 per cent predict a rise in profit compared to just 6 per cent saying they're unlikely to be trading and 7 per cent were unsure.
As the UK went into lockdown last year, the government stepped in to support businesses during the pandemic. On balance across the UK, SMEs felt well supported (71 per cent).
David Owens, South regional CEO of Azets, said: "There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. Hopefully this positive outlook in the South-West will further encourage other businesses to look towards full recovery as well as encouraging entrepreneurialism, which in term will in turn bring employment increases.
"Clearly there are wider challenges with shortages of skilled labour, a hard hit hospitality sector, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities."
Other key findings from the report:
UK SMEs ranked (in order) their business models, the economy and international trade as their top three opportunities.
Financial health, adapting their business models and employee wellbeing were ranked as the top three priorities by UK SMEs.
73 per cent of UK SMEs with staff on furlough intend to bring back all staff from furlough.
71 per cent of UK SMEs have felt well supported by the government during the pandemic.
Only 20 per cent of UK SMEs intend to borrow over the next year.
34 per cent of UK SME business leaders say they have a poor work/life balance with 30 per cent saying they spend over 13 hours a day working on or thinking about their business.
UK SMEs risk being left behind in the race to net zero with sustainability and net-zero commitments ranking ninth out of 11 in terms of priorities for the next 12 months.
Chris Horne, group CEO of Azets, concluded:
"Our first SME barometer was conducted against an unusual backdrop. After a year of deep crisis and upheaval; with the vaccination programme accelerating across Europe and lockdown restrictions beginning to ease, the prospect of an economic recovery feels within our grasp.
"At the same time, plenty of uncertainty remains. Our research highlighted a stubborn optimism among SMEs about the prospects of recovery, coupled with a pragmatic awareness of the need to adapt to the 'new normal' post-covid.
"The biggest opportunity and biggest threat for SMEs is adapting their post Covid business model using technology and flexible working. Those who get this transition right will be in a better position to survive and thrive.
"Given the importance of ensuring that the SME sector continues to adapt and prosper as the economy recovers, these findings point to areas where further government policies are vital in delivering the support businesses need post Covid and post-Brexit, right across the UK."
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