Research conducted by Novuna Business Finance indicates a concerning decline in the percentage of UK small businesses considering new projects to drive business growth, with figures hitting their lowest since January 2021.
The study reveals that the businesses most in need of enhancing their fortunes are the ones stepping back from investing in new growth initiatives. Compared to the previous quarter, the proportion of businesses facing contraction and contemplating future growth projects dropped from 68% to 57%. Similarly, among those anticipating zero growth, the figure plummeted from 63% to 54%.
Novuna’s Business Barometer study, which has tracked the growth outlook of UK small businesses quarterly for the past decade, collected these latest findings. A nationally representative sample of 1,224 small business owners participated in the survey, which sought insights into their consideration of new initiatives to fuel future growth.
The decline in businesses investing in growth initiatives occurs amid heightened concerns over market volatility and a prolonged period of stagnation, with small business growth outlook remaining unchanged for the past five consecutive quarters.
Regional analysis across the UK paints a picture of contraction, with only the East Midlands experiencing a year-on-year increase in the proportion of small businesses considering new growth initiatives. In nine out of 11 regions surveyed, fewer business owners were inclined towards new growth initiatives, with significant drops observed in the West Midlands, East, Scotland, and Yorkshire/Humberside.
Despite the overall decline, there was no significant change in the types of initiatives small businesses were planning to undertake over the past 12 months. The most common initiatives included better cash flow management (32%), reducing fixed costs (56%), dealing with late payments (25%), and investing in new equipment (20%).
However, there was a notable positive change observed across six industry sectors, with a quarter-on-quarter increase in the proportion of small business owners reassessing their financial commitments to pave the way for further growth.
Commenting on the findings, Jo Morris, Head of Insight at Novuna Business Finance, expressed caution despite hopes of an economic recovery. Morris highlighted the persistence of flat growth predictions for small businesses over five consecutive quarters and emphasized the decline in enterprises pursuing new growth initiatives.
Morris also noted the positive focus on cost control amidst uncertainty and highlighted the increasing interest among business leaders in reviewing funding arrangements and financial commitments. Novuna Business Finance aims to support small businesses in achieving their potential by providing flexible tailored financial solutions in collaboration with partners and intermediaries.
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