Small firms bullish about future prospects as two-thirds expect imminent growth

Survey reveals businesses in north-west most optimistic about future

Small and medium-sized businesses across the UK are increasingly confident about the future, with almost two-thirds expecting to grow significantly in the next two years, according to a new report.

A poll of small and medium-sized firms across the UK commissioned by venture capital investor Albion Ventures found that 62% of respondents expected to grow ‘dramatically’ or ‘moderately’ within the next two years, up from 59% in 2013. In contrast, just 3% expected to shrink or wind down.

Broken down by region, the Albion Growth Report study revealed that businesses in the north-west were most confident about the future, with 83% anticipating growth over the next two years, closely followed by London with 81%.

In contrast, businesses in East Anglia were found to be the most pessimistic, with just 39% expecting growth.

Examined by sector, the report found particularly high levels of optimism amongst production businesses as 83% expected to grow.

The report’s authors claimed businesses’ optimism about future growth was further underlined by a 25% fall in the number of business looking to raise finance purely to fund working capital, with a corresponding increase in those firms looking to raise finance to back business development and growth.

The report also highlighted the emergence of ‘threshold’ businesses – those with turnover of between £500,000 and £1m – which were more likely to seek finance, grow their headcount, and give up equity in return for hands-on support from investors than businesses of any other size.

Patrick Reeve, managing partner at Albion Ventures, said: “The evidence from this year’s Albion Growth Report points to a growing sense of confidence among UK SMEs.  The next 12 months promise more jobs created, improved productivity and a stronger appetite for raising finance to support growth as opposed to survival.

“What’s particularly striking about this year’s report is the emergence of so-called threshold businesses, which are on the cusp of blossoming from start-up to established business. Threshold businesses have tremendous potential to drive forward the UK’s economy in the years ahead but face serious challenges: for them, cash is tight and they need finance for growth; they value skilled staff but find it difficult to recruit them.  Recognising their own weakness and vulnerability they are much more likely to give up equity for hands-on support.”



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