Many small and medium British businesses are becoming more confident about the near future despite the challenges posed by the coronavirus pandemic, a new survey suggests.
After a dreadful 2020, two thirds of UK businesses have said they are optimistic about their prospects of growth in 2021, with younger business owners the most upbeat about the immediate future.
It comes as Prime Minister Boris Johnson yesterday set a date for the end of all restrictions – the 21st of June, the first day of summer – as he unveiled the Government’s ‘roadmap’ for gradually exiting lockdown in England.
Beam of hope? Two thirds of UK SMEs expect to grow their business within the next 12 months
Under the plans, non-essential retailers including hairdressers, clothing stores, gyms and outdoor restaurants and pubs could be allowed to reopen on 12 April, with the rest of restaurants and pubs as well as theatres set to reopen on 17 May, and all social restrictions lifted on 21 June.
A global survey of 3,000 firms across six countries, including the UK, by digital accounting platform Dext has found that 66 per cent of UK SMEs expect to grow their business within the next 12 months.
That rises to 75 per cent of firms owned by younger entrepreneurs aged 18 to 34, with the same percentage of businesses run by 35 to 44 year-olds also looking to grow their firms this year.
Older generations were a bit less optimistic than their younger counterparts, with just over half, or 52 per cent, of business owners aged 55 or more believing they will manage to bounce back and thrive this year.
The survey is in contrast with recent findings by the Federation of Small Businesses, which in January said confidence was at an all-time low and at least 250,000 small firms could shut up shop for good this year.
Small businesses’ short-term prospects
Percentage of SMEs expecting to grow their business within the next 12 months:
South Africa 74%
Source: Dext’s global survey of 3,000 firms across six countries
Just under 5 per cent of the 1,400 firms surveyed by the FSB said they expect to close within the next 12 months, putting the UK on course to lose more than quarter of a million businesses.
Adrian Blair, the chief executive of Dext, which conducted the survey, said he was ‘surprised’ by the optimism found across small business, but said that had it been done a year ago it would show a much different situation.
He added: ‘It’s clear that while many businesses are optimistic about 2021, this needs to be underpinned by robust financial planning.’
Many small firms were battered in 2020, as the coronavirus pandemic gripped the nation and forced people to stay at home and shops to close their doors for a large chunk of the year.
However, as restrictions are gradually eased, the Bank of England expects a quick economic recovery as people rush to spend the money saved during lockdown.
The Bank’s chief economist Andy Haldane estimates that by June, Britons will have amassed £250billion in savings, equivalent to 20 per cent of the amount households spend each year.
He believes a ‘decisive corner has been turned’ thanks to the Covid-19 vaccine rollout – and families are ready to fuel a rapid return to prosperity with a multi-billion pound spending spree.
Emma Jones, founder of small business community Enterprise Nation, says business need to be ready to make the most of this spending spree in the interview below.
Emma Jones of Enterprise Nation is worried about business which have not been able to open, like barber shops and hairdressers
She says: ‘In the next three months we’ll need to pivot again to the great outdoors as everyone will want to be out of their houses. This is about retail and services – online and physical. How are you going to get in front of your customers again?’
She says businesses need to think how to make sales until they are allowed to reopen, and adds: ‘There’s going to be so much opportunity for small businesses – they need to get prepared and ready for the £250billion spend.’
Some firms have flourished during lockdown, but others have suffered badly, such as hairdressers, as they could not possibly carry on doing their job online.
Jones adds: ‘Depending on what and how you’ve sold you’ve had a very different pandemic. Online businesses are looking to invest and scale. Businesses we’re concerned about are the butchers, barbers, the ones who haven’t been able to open.’
After hearing about the roadmap to exit lockdown, small businesses are now awaiting to hear if Chancellor Rishi Sunak is going to extend the current VAT cut, business rate relief and other Government help when he unveils his spring Budget on Wednesday next week, 3 March.
Business confidence outside the UK
Measured globally, UK business optimism is second only to South Africa, according to the survey.
Small businesses in France are the most cautious about their short-term prospects, with just over a quarter (28 per cent) of firms expecting things to improve. In the longer term, though, they too are optimistic with 79 per cent saying they are planning to grow.
Less than half small businesses in the US, Canada and Australia are expecting to grow over the coming months.
UK business owners say they do want better access to available tax relief to help them through the challenging times ahead, with over three-quarters (76 per cent) wanting help with financial planning.
Adrian Blair of Dext says:’There is no substitute for a trusted accountant to help small business owners plot their financial future through these turbulent times. Accountants are crying out for tools to help businesses succeed.’
Top 20 tips for those starting a new business
The small and medium firms surveyed by Dext have the following tips for growing a successful business:
1. You need to be patient
2. Don’t be too downhearted if success isn’t immediate
3. Pay attention to the small things
4. You’re not expected to know everything
5. You shouldn’t beat yourself up when you make mistakes
6. Don’t try to do everything yourself
7. It can be a stressful process
8. Be prepared for sacrifice in your personal and professional life
9. Trust your judgement more
10. Be prepared to see things through in the long term
11. Asking questions and taking opinions is a good thing
12. Marketing your business is key
13. You need to be ready to adapt your business offering
14. Hiring an accountant or bookkeeper will make your life a lot easier
15. Think more about cash flow
16. Building relationships with suppliers is critical
17. Connect with other new business owners
18. There will be a lot of admin in the running of a business
19. It can be lonely being the founder of a business
20. Focus on one core product
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