SMEs need to grow for growth

Bibby Financial Services UK CEO Edward Winterton, shares unique insight from SMEs, including business challenges, investment opportunities and confidence level.

Our Q3 2019 SME Confidence Tracker was completed at a time of renewed external pressure on SMEs as the Government promised to leave the EU by 31st October.

Despite a Government campaign to get ready for Brexit, our research found that over half of the nation’s SMEs (54%) still hadn’t prepared for any of the potential outcomes.

On the surface this may appear reckless or ill-advised, but the likelihood is that SMEs have become accustomed to the political uncertainty and many didn’t truly believe the UK would meet its deadline.

There are other barriers that come into play when it comes to Brexit preparations. Firstly, it’s expensive. Many of the SMEs we work with are reliant on having a stable cash flow position to operate. Despite the recent publicity from the Government to get ready for Brexit with the goal posts constantly changing, not all SMEs have the cash, inclination or resources to dedicate to measures when there is no clear end date or outcome.

Supporting SMEs through Brexit

Brexit is a long-term concern for SMEs. We can only hope that in the coming months decisions are made that bring clarity for businesses, enabling them to plan for the future. We have supported UK businesses for more than 35 years, through all economic cycles. This year, we have reconfirmed this support by backing the Government’s SME Finance Charter.

As a member of the British Finance Council, alongside UK banks and finance providers, we were one of the founding signatories of the Charter, pledging to support our SME customers through Brexit. We fully back the British Business Bank’s (BBB) work to encourage and enable SMEs to seek the finance that is best suited to their needs, and to provide information about the full range of financing options available to them.

However, we recognise that access to finance is just one of the issues that SMEs may have to work through. To support businesses further, we have developed a range of educational resources including international trade workshops and regular market insight to guide them through the Brexit process and beyond.

Business as usual for UK SMEs

Our Q3 2019 research shows an SME population that is under pressure but getting on with business as usual. Most encouragingly, SMEs are continuing to trade across borders as a third (33%) exported goods in Q3 2019 and a similar amount (32%) imported from overseas – these figures have remained consistent through 2018 and the first three quarters of 2019.

Furthermore, SME confidence remains steady this quarter indicating that businesses are getting used to operating in an uncertain environment. Sales in Q3 remained consistent with the previous quarter while expectations for the future are more bullish with 43% forecasting an increase in sales. This is welcome news.

When it comes to investment, we’ve witnessed a steady decline in spend since the EU referendum. This picture has continued in Q3 2019 as the average spend has fallen to £69,000 from £81,000 in Q2 2019.  It comes as no surprise that the uncertain economic environment in the UK is the number one barrier to investment for SMEs.

Strong and resilient businesses will be more robust

During this prolonged uncertainty, SMEs will need to focus on growth, as a strong and resilient business with profitable customers is likely to be more robust in the future. Brexit isn’t going away and whatever the outcome, it is likely to have an impact on our economy and businesses for years to come.

What is key for SMEs now is having transparency of the plan so they can better prepare. We hope for greater clarity as we move into 2020 and remain optimistic for a more certain future for UK businesses and the wider economy.

Read the full Q3 2019 SME Confidence Tracker.

Edward Winterton

Author

Edward Winterton, Chief Executive Officer, UK

Bibby Financial Services

Edward is the UK CEO and is responsible for the strategic direction of Bibby Financial Services UK, heading up a team of more than 800 staff in 18 regional offices.

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