More than three in four small business owners (78 per cent) are working on plans to strengthen their enterprises in the next 12-months, with the top priorities being to increase sales income (48 per cent), to launch new service lines (28 per cent), reduce the fixed costs (23 per cent) and to build up financial reserves (23 per cent).
These new research findings from Hitachi Capital Business Finance come at a time when the country prepares for the ending of COVID restrictions and the small business sector gears up for a period of recovery. Hitachi Capital’s Business Barometer research also found that the percentage of small business owners predicting growth has soared from 26 per cent to 36 per cent since January, with growth forecasts recovering in troubled sectors such as retail, hospitality and construction.
With small business confidence at a two-year high, Hitachi Capital asked a nationally representative sample of 1,306 small business owners which initiatives they were prioritising in the next 12-months to make their business stronger.
Beyond boosting income, launching new services and managing costs, the other notable priorities for small business owners for the year ahead were to: spend money on online marketing to support brand awareness and sales (18 per cent), plan ahead with business budgeting (16 per cent), invest in staff development (16 per cent) and improve the digital capabilities of the business (15 per cent). Set against a focus on expansion and sales, the research also suggested that contingency planning has taken a backseat for the foreseeable future. The proportion of businesses looking to make contingency plans has fallen from 21 per cent to 13 per cent over a six-month period.
Sectors driving growth plans
The industry sectors where business owners were most likely to be prioritising growth initiatives were also those sectors that had struggled the most during a year of lockdown.
- Small businesses in the manufacturing sector were most likely to be prioritising the increase of income and new business in the next year (68 per cent, compared to a national average of 48 per cent).
- The launch of new service lines and a push to diversify the business was most prevalent among enterprises in the retail sector (45 per cent, compared to a national average of 28 per cent).
- In the hospitality sector, small business owners were those most focused on building up financial reserves (30 per cent), whilst reducing fixed costs was a top priority of small business in manufacturing, construction and retail (27 per cent for each)
Need for finance to support growth plans
More than half of small business owners (53 per cent) said they would need more finance to see their expansion plans come to fruition over the next 12-months. Finance was most likely to be needed to help business owners hire new people (27 per cent), launch new services and products (25 per cent) and to help them to compete with larger competitors (23 per cent).
Interestingly, more companies this quarter will need an injection of funds to either move to a better location or a bigger office space (19 per cent), whilst others need finance to invest in new production lines and machinery (18 per cent).
Joanna Morris, Head of Insight at Hitachi Capital Business Finance comments: “As we all re-emerge from a succession of lockdowns, small businesses are eager to expand over the coming months, having had such an uncertain time of it throughout 2020. Small businesses are the bedrock of the UK economy, so it is encouraging to see that they are still standing tall and looking forward optimistically at a time when many larger organisations are evaluating the impact of COVID-19.
“As a provider of alternative finance, it is reassuring to see so many small business owners positivity planning for the future and expansion plans being made. However, making plans is one thing, affording them is another and for many enterprises there is a clear need for finance. We’ve been working closely with the small business community throughout the pandemic and as business owners get back on track, we want to reassure them that we are by their side when help is needed most.”