A recent survey commissioned by Paragon Bank has unveiled the far-reaching impacts of supply chain disruptions on small and medium-sized enterprises (SMEs) in the UK.
The study, encompassing responses from over 500 SMEs, sheds light on the challenges businesses face in procuring new machinery assets, leading to extended lifespans for existing equipment.
Key findings from the research indicate that 36% of the surveyed SMEs are compelled to operate machinery assets for durations longer than initially planned. The issue extends to the commercial vehicle sector, with 26% of businesses running their fleets for extended periods due to challenges in acquiring new variants.
In response to these challenges, 31% of the surveyed SMEs have opted to refinance their existing machinery assets. Additionally, 38% have resorted to acquiring pre-owned assets as a pragmatic solution to the scarcity of new options in the market.
The study highlights sector-specific challenges, with manufacturers being the most affected, as 41% of firms in this category report using existing assets for longer than initially intended. Similar trends are observed in the transport and logistics (36%), agriculture (34%), and construction (31%) sectors.
As businesses grapple with the longevity of their current assets, the research indicates a shift in strategy. Approximately 39% of SMEs are gearing up to invest in new machinery assets within the next six months, and an additional 36% are contemplating such investments.
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Diversification in investment plans is notable, with 35% of businesses intending to invest in other equipment. Furthermore, 28% are eyeing new Heavy Goods Vehicles (HGVs), and 20% are considering investments in Light Commercial Vehicles (LCVs).
Financial considerations are paramount in these investment plans. The study reveals that 41% of businesses planning to invest in new machinery assets anticipate spending between £200,000 and £500,000. Another noteworthy proportion, 18%, is looking at a budget range of £100,000 to £200,000, while a similar percentage plans to allocate funds between £50,000 and £100,000.
As the business landscape adapts to the challenges posed by supply chain disruptions, SMEs are strategically positioning themselves for a proactive response, emphasizing the pivotal role of new investments in overcoming the hurdles presented by the current market dynamics.
The survey was conducted by Opinium on behalf of Paragon Bank.