Confidence is soaring in the small business sector, according to the latest edition of Smith & Williamson’s Enterprise Index, the unique barometer of the UK’s leading entrepreneurs and business leaders over the last five years.
Published this week by the financial and professional services firm, the Enterprise Index canvased the opinions of more than 1,000 respondents this summer and the results underline robust levels of confidence, a reflection of the strength they are seeing in their individual business and trading partners.
On the economy, the index showed 81% of businesses believe it will improve in the next 12 months, compared to 57% six months earlier. Of those, 37% think it will improve “significantly”, compared to 23% six months ago.
Meanwhile, 54% of firms have seen the financial health of trading partners improve, compared to 40% six months ago, in spite of mounting fears of a slow-down in the global economy.
Entrepreneurs are increasingly optimistic on their own business prospects - 82% of businesses expect their prospects to improve in the next 12 months, compared to 59% six months ago with 39% anticipating prospects will improve significantly, a leap from 26% in the last edition. Indeed, despite Brexit, 82% expect turnover from overseas growth to increase in the next 12 months, almost double the level of six months ago.
At the same time, the Enterprise Index continues to show real ambition among smaller businesses. Around a third are contemplating a merger or acquisition, while 84% expect to increase headcount in the next year. This compares to just over half six months ago. Far from a skills shortage, 87% of companies have access to the talent they need, compared to 76% six months ago.
These growth plans have been facilitated by better access to funding. 72% think access to funding has improved in the last 12 months. The index also shows entrepreneurs increasingly willing to put risk capital to work to growth - 73% of firms have a greater appetite for borrowing than they did 12 months ago, double the previous level.
At the time of the survey, 70% of firms think Government policy is supportive of private enterprise, compared to 58% six months ago. This has been reinforced by last month’s Budget, which proved favourable to entrepreneurs, with the UK Chancellor holding off any major reform of entrepreneurs’ relief, extending the funding of the Start-Up Loans Programme and cutting business rates.
Nick Travis, Partner and Head of Entrepreneurs at Smith & Williamson, said: “Our Enterprise Index has been providing a unique insight into confidence and intentions among business leaders for more than five years and is an essential tool for entrepreneurs and scale-ups alike. This edition carries a more positive message than that reflected in UK GDP data and suggests that certain parts of the economy are in encouraging health.”
“With Brexit firmly on the horizon, there has been some gloom among the general business population but scale-ups continue to be notably more optimistic. It is possible that sentiment may worsen should the potential for a no-deal Brexit become a reality but with many seeing improving trading conditions and building ambitious expansion plans, there is little sign of the tide turning for entrepreneurs just yet.”
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.