By Daniel Hunter

New research released by Vistage International (UK), a CEO membership organisation, finds that UK CEOs are optimistic about business growth in the next 12 months, but they admit there are tough challenges ahead.

The CEO Confidence Index reveals that 70% of small to medium sized enterprise (SME) chief executives expect sales revenue to increase and over half (53%) expect to recruit more staff in the next year.

SMEs surveyed also expressed a brighter outlook when it comes to profitability. Over half (52%) are hopeful that this element of their business will increase in the short term.

However, in today’s tough economic climate, there are worries and fears about running small businesses. Over a third (34%) of SMEs feel economic conditions have worsened over the last 12 months, with a quarter (25%) predicting the situation will get worse over the next year.

When asked to highlight the most significant business issue UK SMEs face today, a fifth (22%) stated uncertainty regarding the current economic situation, with nearly half (45%) expressing concerns over profitability in the short term future. Obtaining credit for business operations is a worry for a third (33%) of UK businesses.

In terms of the cost to the customer, over a third (31%) of SMEs expect prices for products and services they provide to increase over the following 12 months.

Addressing issues away from home, nearly eight out of 10 (79%) SMEs stated that they are concerned about the potential negative knock on effect the Eurozone crisis will have on their business operations.

In terms of sector findings, a third (33%) of SMEs in the food and beverages sector expected economic conditions to improve, compared to only a tenth of SMEs based in retail. Nearly three quarters (71%) of engineering firms remain upbeat about an increase in sale revenues, compared to construction (64%), entertainment (43%) and education (25%) sectors respectively.

“It’s encouraging to see SMEs expressing optimism regarding business growth, but there are causes for concern," Steve Gilroy, Chief Executive, Vistage International (UK), said.

"The last few years have created a new business landscape that is volatile and unpredictable. Key to success is fresh business thinking and collaboration. SMEs must share ideas and take bold actions in order to survive and succeed.”

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