Confidence reboots as a fifth of small firms expect to grow in the next 12 months

The latest Enterprise Nation Small Business Barometer found a fifth of small businesses (20%) said they are now expecting to reboot growth plans, up seven percentage points from 12 months ago.

It also found of those with growth plans, 34 per cent expected to grow by around a quarter, which could deliver a boost of more than £40bn to the economy at a crucial moment.

The analysis found almost (45%) half of those surveyed in late July were looking to seek investment to fuel growth plans.

While only just over one in ten (16%) say they are currently exporting, the rate was up by two percentage points from this time last year. Firms founded by men (20%) were almost twice as likely to export as those launched by women (13%).

Of those that weren’t already exporting, one in five (20%) said they would like to, and 10 per cent of those that export said they would like to increase overseas sales.

The report also looked at digital confidence and found almost half (44%) now describe their business as ‘digital’, up by one per centage point on last year.

But while they are partly embracing the digital world, a third (29%) say they have purchased technology they don’t have time to use. That rose to 41 per cent in Scotland.

Half said they had found business support online, but 34 per cent said they couldn’t find access to business support that worked for them.

Challenges ahead

Small businesses see persistent cost pressures on consumer pockets as the biggest challenge moving forward (42%) as well as late payments, with 23 per cent saying they are still often paid late for their goods and services.

The majority (60%) warned that the current tax burden on small businesses is already too high, suggesting any tax hikes in the Autumn Budget could have a negative impact on confidence as well as profits.

Emma Jones, CBE, founder and CEO of Enterprise Nation, said: “It’s refreshing to see confidence return after the recessionary pressures of 12 months ago, followed by the unavoidable political turbulence caused by the General Election.

“Entrepreneurs are often at their strongest in the face of adversity, so after putting growth plans on hold during an extremely difficult set of challenges, they can finally see the light at the end of a very long tunnel.

“One key finding is that while small businesses are embracing digital tools, they still need support to take their skills to the next level and help them use their technology more efficiently – but more than a third can’t get access to the support they need.

“Small businesses will play an important role as we reboot the economy, as we’ve demonstrated here with a modest upturn. So it’s more important than ever to create clear and easy routes to help them find the support they need to grow.”

Accessible space to grow

The analysis also found one in five (20%) entrepreneurs are still frustrated at the lack of access to adequate space they need to run their businesses, be that business units, co working spaces or high street pop-ups. The problem was felt most keenly in Scotland (29%) followed by the North West (25%) and the West Midlands (23%). This figure has remained a persistent problem for two years with no movement, the analysis found.

Gender digital gap

While overall, 44 per cent of business described themselves as digital, there was a stark disparity between businesses run by women with only 37 per cent describing themselves as digital versus male founded businesses (52%). By contrast, only 26 per cent of female-founded businesses said they had invested in technology they didn't have time to use, compared to 33 per cent of male founded businesses, suggesting women are not investing in new technology at the same rate as men.

Ready for growth

Optometrist Dhurvin Patel, founded his London-based digital eye health firm Ocushield because he recognised employees were spending more and more time in front of screens, which was a risk to long-term eye health. His firm offers a range of products to protect eyes including medically-rated blue light screens and a unique online eye test.

Dhruvin said he’s noticed businesses are spending again. He said: “I think a lot of businesses have optimised and are ready for growth after a difficult 18 months. We’re definitely seeing more corporates and healthcare companies looking to improve the wellbeing of their employees and users – and now they are looking to spend again. The most advanced businesses want to ensure they are delivering value, and now healthcare is something that can be delivered digitally to support the mandate of prevention, rather than cure.”

Getting VCs interested is still tough

Hertfordshire-based Jay Maniar is a former director of operations for big four accountancy firm KPMG in the Middle East.

Over lockdown he embarked on a fresh new challenge and studied for a post graduate diploma in Digital Business Transformation at MIT/Columbia Business School. Now he uses his vast and diverse experience in high finance to support growing businesses to improve operations and efficiency through digital solutions via his company PVTOL.

While he agreed many more small businesses and start-ups are looking for investment, many will find it difficult to find the funding solution they need, compared to even three years ago.

He said: “It’s so hard to get in front of a venture capitalist (VC) these days. The start-ups and small businesses that I am working with are finding it tough. Things that would have got you funding series A in 2021 for example, just isn’t working in 2024.

“Even though startups today might be stronger than they were in 2021—like having more traction and clearer value props—getting VCs interested is still tough. They're being extra cautious now, especially about where they put their money.

"For example, venture capital in the UK is heavily concentrated in the South East, particularly in the Golden Triangle (Cambridge, London, Oxford). Government plans aim to spread investment more evenly across the UK. But whether these plans will actually attract venture capital to other regions remains to be seen. VCs are likely holding off to see how these initiatives play out before committing to startups outside these hotspots."