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SMEs predict accelerating revenue growth in 2017

There is plenty of optimism for a happy new year among small and medium-sized enterprises (SMEs) with three quarters of firms saying it is business as usual following the Brexit vote, according to a new survey.

Despite losing some confidence in their business prospects and the broader UK economy, the latest SME Growth Tracker has revealed that SMEs have increased their revenue growth expectations for 2017 with three in four predicting profits will rise by +1.1% over the coming year compared with 0.2% over the last 12 months.

Based on a YouGov survey of more than 1,000 SMEs, the Q4 Capital Economics report found an increase in project revenue and jobs with SMEs forecasting a +1.8 per cent increase in revenue and employment growth of+0.8 per cent in 2017, compared with a prediction of +1.5 per cent for revenue growth and +0.7 per cent in employment growth in the Q3 tracker.

According to the study, commissioned by Amazon UK and Enterprise Nation, SMEs in the East of England, South East, and West Midlands, as well as those in the financial sector, professional services, and IT and Telecoms sector, are forecasting the highest revenue growth.

However, amidst the positivity weakening confidence among the sector has seen the SME Confidence Index score fall from +5 in Q3 to -4 in Q4 for their own companies, -2 to -9 for their respective industries, and -13 in Q3 to -15 for the wider UK economy.

SMEs in London, the North West and the South West expect business conditions to deteriorate the most in the coming year, with the scores for their business of -10, -10 and -11 respectively in Q4.

Emma Jones MBE, founder of Enterprise Nation and HM Government’s crown representative for small business, said: “Britain’s small businesses play a crucial role in driving our economy, and are the most driven, adaptable, and resilient you will ever meet.
“With the right support, like lower rates, easy access to finance, and digital opportunities which boost exports and productivity, you’ll continue to see them grow year-on-year.”

But while Brexit has so far had little effect on the sector with almost three quarters (74%) of SMEs experiencing no delays on business decisions following the vote, some think it could hurt growth over the next 12 months, while SMEs that use e-commerce are more confident and expect stronger revenue growth in 2017.

Mark Pragnell, chief project economist, Capital Economics, said: “Although a majority of SMEs see the consequences of Brexit as a risk over the next 12 months, Brexit isn’t everything. A bigger number of SMEs see euro-zone instability, a fall in domestic demand, higher price inflation and a global recession as greater risks to their business.”

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