By Daniel Hunter

Tenacious entrepreneurs are confident about trading conditions as they look to scale up in 2013. Nearly half (48%) of the business owners who set up shop in the last two years are looking to expand their business operations in 2013, according to Aviva’s bi-annual small to medium sized enterprise (SME) Pulse.

Spurred by the buoyant national mood of the Jubilympics year, SMEs are feeling optimistic about the new year. Aviva’s SME Pulse reveals twice as many SMEs (65%) expect average to strong sales in the first half of 2013, compared to just 32% in the same period last year.

Firms with 11-25 employees are most optimistic out of all SMEs with nearly three-quarters (74%) expecting average to strong sales in the first half of the year.

The report by Aviva, the UK’s largest insurer, reveals that nearly twice as many SMEs (30%) diversified their business in the past six months to maintain business profitability compared to 17% during the same time in 2011. Almost one in four (23%) questioned are planning to continue diversifying in the first six months of 2013 to keep their businesses healthy.

This renewed optimism has also translated into more ambitious targets as 42% of businesses set themselves new goals and objectives at the start of the year. Nearly half (49%) of SME owners felt they had met or achieved their goals last year with a similar number (43%) predicting more ambitious business plans in 2013.

Overall, more than a third (37%) are looking to grow their businesses, motivated by wanting to boost revenues (80%), to benefit from economies of scale (36%) and generally feeling that it is the right time to grow (27%). In addition, the Pulse found a strong contingent of SMEs (53%) who are happy with the current size of their business.

“It’s promising to see such positive attitudes for the start of the year across the SME market," David Bruce, commercial product manager at Aviva, commented.

"There is a growing focus and importance on the sector in driving economic recovery and this optimism is further substantiated by the number of SMEs predicting ambitious growth plans for 2013 These are the very businesses that are vital and lie at the very heart of Britain's economic recovery.

“The Jubilympics year has certainly driven a renewed sense of optimism in the UK, and SMEs are carrying this positivity into 2013. The size and nature of small to medium-sized businesses allow owners to be more flexible and nimble in responding to market conditions and to make those business decisions that can have a great impact on success.”

For 60% of SMEs, improvement in policies and measures that are business-focused, such as relief on business rates were important indicators influencing business confidence.

Bank lending remains a top priority particularly as businesses look to grow in 2013. Aviva’s SME Pulse found that two-thirds (65%) of firms with 26-100 employees reported that lending schemes targeted at SMEs are the most important factor in influencing business confidence.

Positive reports of macroeconomic figures are seen to have an encouraging impact on SMEs. Against the 1% growth in GDP reported last October, 41% believe that economic statistics can have a measurable financial impact on business performance.

“The latest data indicates the importance of wider macroeconomic measures in shaping business confidence. With the increasing spotlight on SMEs, business owners are also looking for support and action from the Government," Bruce added.

The Pulse reveals that over two thirds (69%) of SMEs feel confident that they have the right insurance in place for their business compared to half (51%) in 2011. And, only one in ten (12%) said they had no insurance in place compared to one in five (20%) in 2011.

“Regardless of size, it’s important for SME owners to be aware of the need to have the right insurance in place to protect their business," said Bruce.

"While it’s promising to see SMEs have an increased confidence that they have the correct insurance they need to also remember to assess their insurance needs regularly, especially if they are looking to diversify or change their business model.

“If you are a business owner who is unsure about your insurance needs you should speak to your local insurance broker as they are best placed to advise on the most suitable protection for you, your business, your employees and your customers.”

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