Leadership & Productivity

Younger SMEs are more likely to predict growth in coming months

3 min read

22 November 2017

Former special projects journalist

SMEs trading for less than five years are nearly four times as likely to predict significant growth in the next three months than those trading for ten or more years.

The UK’s youngest small businesses are the driving force behind business confidence. Those trading for less than five years are nearly four times as likely to predict significant growth in the next three months than those trading for ten or more years (15 per cent and four per cent respectively).

This is according to research from Hitachi Capital Business Finance which reported that, for the third consecutive quarter, the proportion of young businesses predicting growth has risen, peaking at 54 per cent.

This figure is much lower for the overall SME sector, with only 38 per cent predicting growth – this has remained static for the last nine months.

The research also found significant perception gaps of the three top concerns for the period among small businesses in general.

Only 25 per cent of younger SMEs were worried about market uncertainty, compared to 31 per cent of older businesses, while eight per cent of younger businesses were concerned about the value of sterling compared to ten per cent of older businesses. Additionally, nine per cent of small businesses were worried about the impact of red tape, compared to 19 per cent of older businesses.

Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance, said: “Our latest research suggests that the youngest of the nation’s small businesses are those most likely to predict growth for the months leading into 2018. Many are digitised and still evolving their service lines and customer footprint and are more agile in being able to adapt to a changing market environment.

“This is positive for the economy at large, but it means 2018 will be a year when small business finance will be even more sharply under the spotlight. If younger enterprises are to be growth drivers, then their ability to secure the right kind of funding and when they most need it will become vital not just to the vibrancy of the small business sector, but also the general health of the broader economy as well.”

This article is part of a wider campaign called the Scale-up Hub, a section of Real Business that provides essential advice and inspiration on taking your business to the next level. It’s produced in association with webexpenses and webonboarding, a fast-growing global organisation that provides cloud-based software services that automate expenses management and streamline the employee onboarding process.