SME investment plans still fragile

Concerns over rising costs have doubled among SMEs, according to recent findings published in the Bibby Financial Services Q4 SME Confidence Tracker. Although confidence has generally been growing over the last year, the tracker highlights small businesses' caution over investment and spending intentions.

Findings show that 22% of SMEs are worried about growing expenses. A further 18% cite increasing competition, while 11% noted late payments as key challenges that could directly impact their business. In addition, the volatility of the pound’s value and exchange rate can make it difficult for import businesses to maintain a high profit margin.

Borrowing intentions

The immediate impact of this is predicted to be a more reserved approach towards investment and spending. Over the next three months, SMEs plan to invest an average of £49,237 – less than half the £101,919 they intended to invest previously in Q2 2016. Some sectors, such as manufacturing, have seen investment drop by 150%, while, according to the Close Brothers Business Barometer, almost 60% of SMEs are holding off hiring new talent due to uncertainty over the future.

David Postings, Global Chief Executive of Bibby Financial Services said: “smaller businesses are becoming increasingly concerned about rising costs. We’re seeing more SMEs looking towards efficiency, rather than investment for growth at the start of 2017. Rising costs fuelled by inflation and the drop in the value of the pound is a double-edged sword for many businesses.”

Reducing risk

Ensuring your cashflows are strong is a key part of shockproofing your business in a rapidly changing market. Making sure suppliers pay on time and ensuring your own debts are settled promptly is important in helping to shelter your company from the impact of a sudden swing or downturn, giving a safety net against unexpected fluctuations.

If you are concerned about maintaining a robust cashflow, contact one of our Dukes Bailiffs operators for advice.