The world in 2017 is a very different place than it was just a year ago. History-making events like Brexit and the US presidential election have dominated global headlines. Change swept across the world, populist movements swelled, trade agreements were cancelled, commodity, currency and asset prices fluctuated erratically, and the potential for major policy shifts rattled boardrooms and markets. At the same time, technology continues to disrupt entire industries, raising future concerns about employment, productivity, and global growth.
Amid all this uncertainty, what do small or medium enterprises (SMEs) really think? Are they battening down the hatches or boldly expanding?
To find out, American Express commissioned Oxford Economics to survey more than 3,000 SMEs across 15 countries and 16 industries. Here’s what the British business owners had to say:
‘We’re optimistic about growth…’
More than half of UK SMEs anticipate revenue growth of at least 4% per cent over the next year, while 16% expect double that. In terms of profitability, they’re similarly upbeat: 57% forecast a net profit of 4% per annum over the next three years, while more than a fifth expect net profits in excess of 8%.
‘… but nervous about Brexit’
While Indian, American, Japanese and Canadian SMEs express high confidence in the state of the global economy over the next year, European SMEs are more subdued, reporting confidence levels below the global average. In a post Brexit-vote era, more than a quarter of British SMEs say they’re concerned about domestic political uncertainty while 35% worry about uncertainty in their European export markets.
‘Cash flow is a problem’
When it comes to funding their businesses, Britain’s entrepreneurs are struggling; 57% say they face difficulty accessing the finance they need to grow their business, while 60% say that inadequate cash flow affects their ability to pay suppliers on time. UK business owners fund their firms using: working capital (54%), bank loans (48%) and private equity (37%). Many say they’ll be looking to non-bank sources of finance such as crowdsourcing and cards over the next year.
‘We’re looking at new markets’
British SMEs want to grow into new markets; 43% say expanding into new domestic markets will contribute most to the financial performance of their business over the next three years, while 32% are looking at cracking new international markets. Around half say they’re confident they definitely have the right plans in place to boost export sales. The number of UK SMEs generating 50% or more of their revenues from exports will more than double over the next three years, from 21% to 44%.
‘We’re in it for the long term’
When asked about the long-term goals of their business, profit margin growth (54%) and revenue growth (47%) were the top objectives. More than a quarter (28%) of UK entrepreneurs say sustaining the business for future generations is an important long-term goal, compared to 23% of respondents outside Europe. British business owners are in it for the long haul.