Research from Aldermore bank indicates signs of recovery for UK SMEs, as they reveal plans to invest in their businesses in the next year, coinciding with the easing of lockdown restrictions.
SMEs plan to spend an average of £97,000 to grow their business in 2021 and help kickstart their recovery from the Covid-19 pandemic, Aldermore said in a statement.
The research was conducted by Opinium Research, between 10 and 25 February 2021 with a nationally representative sample of 1,271 senior decision-makers in UK SMEs.
Over the next 12 months, one in four (25%) SMEs will invest in their online presence, with one in five (21%) advancing their digital marketing. A further one in four (21%) will spend on new equipment and 20% will invest in their staff through training. Meanwhile, one in five (18%) plan to diversify into new products and services. One in ten (10%) will invest in greener/more sustainable activities.
Apart from Covid-19, 15% said the main priority for the next 12 months in recovering from the pandemic will be expanding their customer bases. The other key priorities for SMEs include managing changes from Brexit (13%) and sustainability (11%). Meanwhile, one in ten (10%) will be focusing on improving their current products and services.
Tim Boag, group managing director, business finance at Aldermore, said: “It’s encouraging to see that SMEs are investing in their recovery from the Covid-19 pandemic. Recent data reveals a vastly improved near term outlook for businesses, with the easing of restrictions. Confidence from SMEs is growing, and this is reflected in plans to invest in the growth of their businesses to recover effectively from the pandemic.
“During the peak of the pandemic last year, we launched our ‘Small But Mighty Businesses’ campaign to share real stories of SMEs who were tackling the challenges of Covid-19, and how they were innovating and supporting each other. We’re now launching new content and providing additional guidance to SMEs including tips on how they can effectively recover from the pandemic, by future-proofing their business against future shocks and investing in their business long term. A good starting point would be to research the various funding options available such as specialist finance and how to make the most of the savings they have. The economy is seeing signs of a recovery and we’re here to back businesses as they look to grasp the opportunities of the future.”
Business confidence is now at its highest level since 2014 following the easing of restrictions on 12 April, and two-thirds of SMEs expect their performance to improve between April and June 2021.
This growing confidence is translated in the recent performance of businesses, with SMEs seeing a 12% improvement in monthly business income since July 2020, at which point SMEs were experiencing a 30% decrease in their usual income. One in 10 (9%) SMEs have seen a decrease in income of more than 70%, however this is a significant improvement on the one in five (18%) who were experiencing this in July last year.