A recent study by Novuna Business Finance, part of its Business Barometer series tracking growth forecasts for small businesses, revealed that 39% of agricultural business owners anticipate significant or organic growth in the next three months. This marks a notable increase from 26% in the previous quarter.

The research, commissioned from YouGov, involved a representative sample of 1,124 small business decision-makers, spanning all key industry sectors, conducted between 5-19 January 2024.

For the first time, the percentage of agricultural small businesses forecasting growth surpasses the national average for all UK small businesses, which remained relatively stable at 32% over the past three quarters.

% of small business owners predicting growth each quarter: The agricultural sector compared to the UK national average

This shift contrasts with the post-Brexit and pandemic years when growth predictions in the agricultural sector lagged behind the national average.

While the national small business growth forecast remained flat for nine months, Novuna’s findings highlighted distinct trends in various industry sectors. Sectors experiencing a substantial rise in the percentage of business owners anticipating growth included manufacturing (44%), media (45%), and legal services (40%), all reaching a 12-month confidence high.

Quarterly growth predictions over the last 12 months

Conversely, the first quarter of 2024 witnessed a decline in growth outlooks for the leisure/hospitality sector (dropping from 35% to 24% compared to the previous quarter) and the transport/distribution sector (down from 38% to 27%).

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The construction sector, grappling with challenges, reported stagnant growth predictions for the third consecutive quarter at 23%, the lowest level since summer 2022.

The resurgence in confidence within the agricultural sector aligned with an increase in small business owners indicating they were working on new initiatives for growth in 2024 (70%, up from 64% last year and 60% two years ago).

The common initiatives pursued by agricultural small businesses for growth opportunities in the upcoming year include keeping fixed costs down (44%, up from 31% a year ago), investing in new equipment (30%, up from 26% a year ago), and improving cash flow (25%, up from 20% a year ago).

Jo Morris, Head of Insight at Novuna Business Finance, said: “The upturn in the percentage of farmers investing in new growth projects may well be the reason why they start 2024 with a more bullish outlook than previous years. At Novuna Business Finance, we are committed to supporting the funding needs of established agricultural enterprises and we back their plans to innovate new projects that will secure growth in 2024.”