The majority of UK SMEs predict no change in growth over the next few months with some forecasting modest growth, showing an overall upturn in growth predictions according to research from Hitachi Capital Business Finance (HCBF).
Offering a snapshot into SME expectations for the autumn months, HCBFs Business Barometer suggested that for the three months to 30 September, 49% of UK SMEs will hold their position, with 35% prediction growth, and only 16% forecasting contraction or decline.
Gavin Wraith-Carter, managing director at HCBF (pictured above), explained: “At first glance, the results of our tracking study look similar to last quarter - but dig deeper and there are some significant findings.”
Percentage of small businesses that predict net growth to 30 September – and, within this, those that predict significant expansion
| % that predict net growth (significant or modest/organic) | % that predict significant expansion | |
|---|---|---|
| Q3 2017 | 40% | 6% |
| Q4 2017 | 38% | 7% |
| Q1 2018 | 39% | 6% |
| Q2 2018 | 41% | 6% |
| Q3 2018 | 36% | 7% |
| Q4 2018 | 36% | 5% |
| Q1 2019 | 36% | 6% |
| Q2 2019 | 34% | 4% |
| Q3 2019 | 35% | 5% |
Credit: Hitachi Capital Business Finance
As a division of Hitachi Capital UK, HCBF provides a range of business finance products to small and large businesses in a multitude of sectors including transport, agriculture, construction, and financial services providers.
With an asset portfolio of more than £1 billion, the company product range includes hire purchase, finance lease solutions, and stocking and block discounting which are provided through brokers, vendor organisations and manufacturers.
Small businesses outlook to 30 September
| Q3 2019 | Q2 2019 | Q1 2019 | |
|---|---|---|---|
| Significant growth | 5% | 4% | 6% |
| Modest / organic growth | 30% | 31% | 30% |
| Stay the same/ no change | 49% | 49% | 47% |
| Contract / slow down | 10% | 9% | 10% |
| Struggle to survive | 6% | 7% | 7% |
Credit: Hitachi Capital Business Finance
Wraith-Carter continued: “The spring months saw the first fall in small business growth predictions for a year and there are encouraging signs now that this was not the start of a seasonal slide. Second, there are some major variations by sector this summer and in six sectors some notable rises in growth predictions.”
Despite the fall in SME growth predictions for Q2 in the manufacturing, construction, retail and real estate sectors, six industry sectors actually saw a rise in the number of business leaders that predicted growth.
HCBF theorised that perhaps Brexit was creating work for SMEs that provide consulting services that relate to business planning, regulation and accounting, as the most significant rise in growth predictions was seen in the professional services sectors.
Most notably, the finance and accounting sector saw a sharp rise in growth predictions from 33% to 48% in three months. Additionally, over the last six months the legal services growth predictions have risen from 37% to 44%.
In contrast, the only sector with more SME owners predicting contraction over growth was the transport and distribution sector, falling from 38% to 27% over the last six months.
“It’s also important to note that whilst transport, building and manufacturing businesses have been faced by tangible challenges from Brexit uncertainty, small businesses that provide professional and consulting services seem to be prospering,” Wraith-Carter concluded.
Percentage of small businesses that predict net growth to 30 September – by industry sector – including comparative results for the previous two quarters
|
Q3 2019 Net % that predict growth |
Q2 2019 Net % that predict growth |
Q1 2019 Net % that predict growth |
Q3 2019 Net % that predict contraction | |
|---|---|---|---|---|
| Finance & accounting | 48% | 33% | 42% | 11% |
| Legal | 44% | 41% | 37% | 11% |
| IT & telecoms | 41% | 38% | 41% | 13% |
| Media & marketing | 37% | 36% | 33% | 22% |
| Retail | 34% | 40% | 31% | 20% |
| Real estate | 32% | 45% | 28% | 15% |
| Agriculture | 32% | 27% | 24% | 23% |
| Manufacturing | 30% | 38% | 42% | 10% |
| Transport & distribution | 27% | 25% | 38% | 29% |
| Hospitality & leisure | 27% | 29% | 24% | 7% |
| Construction | 26% | 31% | 31% | 16% |
Credit: Hitachi Capital Business Finance
