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A new survey reports improved SME confidence, although many businesses remain uncertain about their road to recovery. The March 2021 ScotPac SME Growth Index reveals that more SME owners are planning to invest in their businesses in 2021 compared to last year, and there has been a significant rise in the average revenue growth forecast for the first half of the year.
The twice-yearly SME Growth Index surveyed 1253 SMEs nationally and found 685 of them plan to invest in their own growth over the next six months – in late 2020, only 650 were willing to invest. It also recorded an eight-point rise in average SME revenue growth forecast for the first half of 2021, reflecting a strong level of confidence for many businesses.
“After a year facing pandemic and recession, there’s now a sense of SMEs really wanting to get back to business as usual,” ScotPac’s CEO Jon Sutton said. “But, despite these positive signs, our research shows the recovery is uneven and varies significantly by state, region and industry. There are still many small businesses who are doing it tough.”
The study asked SMEs about their strategies for recovery and growth in 2021, with 65 per cent saying that they will make changes to the structure of their business in 2021, either to recover from the pandemic or to take advantage of opportunities.
“I believe business owners are on the right track with this intention because to be in a position for recovery and growth it’s essential to have adequate funding in place,” Sutton said.
On the other hand, there is a high level of uncertainty around recovery, with 34 per cent saying that without significant market improvement they’ll close or sell their business, an increase from the 31 per cent recorded in 2020. Only half of those polled had no plans to close or sell.
When asked how they feel about running their business now compared to before the pandemic, 44 per cent were confident while 55 per cent had more pessimistic feelings. On a positive note, 37 per cent are more optimistic about the prospects for their business now than they were at the start of 2020.
“Given how bad things could have been, you could say it’s astounding how well the SME sector came through such a challenging year,” Sutton said. “There are positives, but we have to be realistic about what lies ahead. We still have half of the businesses polled this round saying they are not yet ready to invest back into their business.
“It will be hard for the economy to really take off until more small businesses are comfortable and willing to do so.”
Sutton said that SME owners’ desire to “get back to business as usual”, along with their uncertainty about how to achieve this, shows a need for SMEs to seek expert advice.
“Regardless of whether their focus is growth or recovery, it is crucial that they [SMEs] secure appropriate funding and seek good advice to put themselves in the best position to achieve it,” Sutton concluded.