73% of UK small businesses predicting growth over next two years

54% of millennial business owners think Brexit will damage their ability to access new markets

73% of the UK’s small businesses with five or more employees are expecting to grow “dramatically or moderately” over the next two years, according to Albion Ventures fourth Albion Growth Report.

The survey of 1,000 small businesses found that only 5% thought they are likely to shrink or wind down, while 50% of respondents are planning to grow their employee base during the next two years

In light of this, finding skilled staff was cited as the top challenge facing business owners, followed by problems caused by red tape, regulatory change and difficulty accessing new markets. The decision to leave the EU ranked down in sixth place, with lack of access to finance falling from fifth last year to 13th.

There were stark divisions in opinions on the impact of Brexit: 36% said it will help them enter new markets, compared to the 41% who expect negative consequences.

Reflecting the generational and regional split shown in the referendum result, 54% of millennial business owners aged under-35 thought Brexit will hinder their ability to enter new markets, while leaving the EU was cited as the biggest obstacle to growth by businesses in Scotland and third for those in London. 56% of sole traders claimed it wouldn’t impact their growth.

Entrepreneurs in the East Midlands showed the most optimism about their growth potential (70%), followed by England (69%) and London (65%), with Wales the most pessimistic (39%).

More than 25% of all respondents and around 33% of businesses with more than five employees said they would consider seeking investment from venture capital, private equity or angels, while 52% of IT and telecoms firms and just 13% of construction were interested in securing finance.

Companies in manufacturing were the most optimistic about growth and the most relaxed about Brexit, with those in retail and construction the pessimistic on both counts.

Patrick Reeve, managing partner at Albion Ventures, said: “Against a backdrop of profound change, one element that has remained reassuringly unchanged is the optimism underlying the UK’s small businesses.

“The downside is that the economy is coming under capacity constraints at a time of considerable political uncertainty. While many of the pressures on growth we have seen in recent years have eased, the skills that enable us to compete are in short supply.”

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