By Daniel Hunter
Almost all of the UK’s small and medium sized enterprises (SMEs) have plans to invest in growth over the next year, according to new research from Clydesdale and Yorkshire Banks.
The survey, conducted as part of the Bank’s Business Week, suggests that more than 4.5million SMEs (97%) have some plans to invest in growing their business in 2014.
The survey also indicates that rather than looking to maintain the status quo or cutting back, keeping pace with demand was driving investment among the nation’s businesses, with 60% citing this as being influential in their decision to invest in growth.
Confidence is another major influence on the decision to invest with 57% of respondents citing optimism as an important factor in their decision making. Only 10% said that a lack of confidence was a barrier to investing in growth, while 4 out of 10 (43%) said there are no barriers at all for them to investment.
SME investment in the next year could also be a significant contributor to UK economic growth, according to the survey’s results. The Clydesdale and Yorkshire Bank research indicates that SMEs plan to invest an average of 10% of turnover on growth. Based on official figures this could be worth up to £160bn, or £34k per business, to the UK economy.
The top three identified investment areas are new equipment and technology, expansion into new markets, and employing new staff. Medium-sized businesses (50-249 employees) are the most likely to be looking to expand into new markets (63%); small businesses (10-49 employees) are the most likely to be recruiting new staff (43%); while investment in new equipment and technology was highlighted as a priority for all businesses (between 24%-41%).
While the survey provided an overall picture of confidence and investment, there was recognition that some factors could potentially be barriers to growth and investment for some SMEs. A quarter of those survey felt that the availability of funding was an issue for them; while 18% said finding new customers was their greatest challenge.
Paul Shephard, Director for Business and Private Banking at Clydesdale and Yorkshire Banks, said: “These are encouraging results and echo recent official growth figures. They suggest many SMEs are at the point where they feel more certain about investing in their businesses. As the majority of UK companies are small and medium sized businesses, this has to be good for the economy as a whole.
“It’s important that we recognise and understand that there are still barriers to growth for some businesses. Access to funding has changed across the market place, but it is available to well-managed businesses with strong plans for growth.
“As part of our Business Week, we are opening our doors to businesses across the UK, and in, partnership with local and national experts, offering SMEs the chance to understand what options and support are available to help them overcome the growth barriers they face.”
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