Small British firms more confident about revenue growth than medium-sized counterparts

The companies’ predicted revenue growth of more than a third amounts to an increase of £2.4m.

However, breaking down the SMEs by size, small firms predict an average turnover growth of 69 per cent, which hugely outpaces the 25 per cent increase expected by medium-sized companies.

Overall, 52 per cent of business owners are putting their focus on organic growth in the short-term, while 31 per cent are looking to retain their staff.

Culture Amp is one firm that has profited from companies that are eager to keep workforces happy, counting Airbnb and Uber among clients. The firm raised $6.3m this year, which will allow it to bolster its services that track employee engagement, sentiment and more.

Discussing retention with Real Business, Culture Amp’s CEO Didier Elzinga, said: “We’ve seen companies take the results and use them to make big changes to the way the company is run, how they handle training, and which managers are effective – and which aren’t.

“One of the things that we like to remind people is that “happiness” can be a bit of a misnomer. We want people to be happy generally but that in itself does not create a great culture – instead we seek to measure a broader set of things often referred to as engagement i.e. is the organisation doing things to make it a place where staff feel like they want to go above and beyond?”

Elsewhere, 30 per cent of senior decision makers believe growth is a short-term priority, which fell from 57 per cent in 2014 to highlight the changing attitudes and ambitions of SME leaders. Some 27 per cent are out to introduce new products, meanwhile, and 18 per cent plan to hire new team members – a six per cent increase on last year.

Looking further ahead at what they consider the “ultimate aim”, 28 per cent plan to achieve regional growth and 11 per cent want to sell the company.

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A worldwide approach was found among 18 per cent of SMEs that are planning to expand overseas, up from six per cent in 2014. This spiked to 29 per cent in London and fell to 12 per cent in the East Midlands, according to the report.

That said, East Midlands-based SME expect a turnover growth of 109 per cent, the highest nationwide, while North West and South East firms were the most pessimistic with predictions of 14 per cent and 18 per cent.

Celebrity entrepreneur Myleene Klass aligned with Santander earlier this year and spoke of the importance of taking a business international. Her BabyK range in Mothercare is now in 32 countries, while her lingerie & swimwear line with Littlewoods sells an item globally every 15 minutes.

Mike Reeves, joint MD of SME Banking at Santander, said: “It’s extremely encouraging for UK plc that SMEs, the lifeblood of the economy, are predicting strong growth over the next five years. It is particularly promising that nearly a fifth are focused on international expansion, as exporting our products and services overseas is key to ensuring a stable, resilient economy.”

Despite the ambition, 27 per cent of firms said a tough trading environment was a challenge that needed to be overcome, although progress has been made since last year as the number fell from 47 per cent.

Additionally, 17 per cent felt that hiring and securing staff is a hurdle to clear – up by three per cent – and the age-old issue of access to finance was cited by 11 per cent – down from 25 per cent in 2014.

Interestingly, on a sector basis, the hospitality and leisure SMEs are the most optimistic and plan a turnover growth of 99 per cent in the next five years. They should be warned, however, by observing the fortunes of leisure firms Ryanair and Halfords, which experienced very different results over summer.

Retailers were also eager and expected an 85 per cent revenue growth, but those in construction, manufacturing and IT were less bullish and predicted increases of 27 per cent, 19 per cent and 15 per cent respectively.

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