1:06 AM 16th November 2023
Yorkshire SMEs Expect A Promising 2024, With A Renewed Sense Of Confidence Despite Challenging Environment
Rabbit Hole Cakes participated in the survey
Small and Medium Enterprises (SMEs) in Yorkshire are looking forward to a promising 2024, as they expect to hit an average of 16% year-on-year revenue growth, bringing overall Yorkshire SME turnover to £152.1 billion and contributing £47.1bn to the nation’s economy.
New research outlined in the Ambition Index from Three Business – the B2B arm of the mobile network Three – has revealed Yorkshire SMEs plan to invest £18.4bn in growth next year, a 3% increase compared to 2023, as nearly two thirds (67%) say they plan to ramp up investment. The top areas they’re planning to spend on are facilities and tools (34%), staff training and development (24%), marketing (21%), and customer service (21%).
Almost three quarters (74%) of Yorkshire SMEs feel more confident having survived the crises and uncertainty in recent years linked to the cost of living crisis and the pandemic.
This is underpinned by feelings of resilience and confidence as:
Almost three quarters (72%) feel that their business is resilient, above the national average of 69%;
Seven in ten (71%) feel that their business is well structured and prepared to overcome any difficulties in 2024;
Over two thirds (68%) feel optimistic for the year ahead.
Yorkshire SME leaders surveyed have also had to show agility in the past few years, as over four in five (83%) said they introduced changes to their business in response to the pandemic. While more than seven in ten (72%) have adapted and changed their business to survive over the past few years, 59% actually felt that the uncertain environment in the last few years has created opportunities for their business – above the national average of 57%.
Optimism against a challenging environment
While the future is looking brighter than it did last year, there remain a number of challenges for businesses of all sizes, which are often felt more acutely by SMEs.
Just under Three in five (59%) of those Yorkshire SME leaders surveyed said that the challenges they face as a small business are different to those faced by medium or large businesses, and 70% said the uncertain environment has intensified the risks and pressures of running a small business. Yorkshire SME leaders are particularly worried about the cost-of-living implications on customers (38%) and their business (24%),high interest rates (22%), and supply chain issues (21%).
The confidence that Yorkshire SME leaders surveyed have for their own business prospects does not extend to the broader political environment, with just 29% saying they are optimistic ahead of the Autumn Statement, compared to the 20% that feel apprehensive and 30% that feel pessimistic. Meanwhile, 17% don’t feel the statement will have much impact.
Of the issues the Chancellor is expected to address, almost a third (32%) of Yorkshire SMEs want to see an increase in the threshold for Small Business Rate Relief. More than a quarter (26%) would also like to see clarify of government policy, alongside measures to support the labour market e.g childcare, pension changes (24%), and rate relief to be extended past next April (24%).
Mike Tomlinson, Managing Director at Three Business commented:
“Small and medium businesses are the lifeblood of the UK economy. It’s great to see the strong sense of optimism and learned resilience that’s coming through among all SME leaders. But I’m particularly encouraged to see the confidence of the leaders in Yorkshire. These leaders have shown that they have adapted and risk-proofed their businesses and are now ready to invest in their future, seize the opportunities that come their way and take on the challenges of the next 12 months. At Three Business, we work in partnership with SMEs in all sectors and regions to make sure connectivity is an enabler for growth.”
Commenting on why she’s supporting the Ambition Index, business mogul, investor, mentor and TV star, Sara Davies says:
The UK picture for SMEs
“The last few years have presented numerous, often unforeseen challenges, but I work with some amazing businesses and leaders and have been so impressed by their resilience and how they have adapted. The UK’s SMEs are vital contributors to the economy and to their communities, and I’m genuinely excited looking ahead to next year knowing there is so much appetite for growth and investment, as The Ambition Index shows.”
While Yorkshire SMEs are feeling particularly confident, the picture for UK SMEs as a whole is still bright. Most are looking forward to a promising 2024, as they expect to hit an average of 15% year-on-year revenue growth, bringing overall SME turnover from £2tn in 2023 to £2.3tn next year.
Contrary to the International Monetary Fund’s (IMF) gloomy outlook, that Britain’s economy will be the slowest growing among G7 nations next year, UK SMEs are collectively planning to invest £252 billion in growth in 2024, a 27% increase compared with 2022. This means that UK SMEs are planning to invest a sum that that is approximately equal to the value of the economy of Finland during 2024. Seven in ten (70%) feel optimistic about the prospects for their business in 2024 and the same amount say growth is the priority for next year.
Nearly a quarter (24%) of SME leaders across all sectors say they are planning to prioritise investment in recruitment, with an estimated collective spend of £20.4bn, equivalent to an extra 630,000 jobs paying the UK average annual salary of £32,000 per year.
Other areas of investment focus in 2024 include:
Marketing, with a collective estimated planned spend of £35.1bn
Staff training and development - £27.2bn
Customer service - £24.7bn
Improving facilities or tools - £22.3bn
Digital technologies, including AI - £19.7bn