The Future Looks Bright For Northern SMEs, Reveals Azets Inaugural SME Barometer
Azets, the UK's largest regional accountancy and business advisors to SMEs, has today launched its inaugural SME Barometer findings. The outlook for the northern regions looks broadly positive with investment and growth planned for many Northern SMEs. However the toll the pandemic has taken on the mental health of many business leaders is stark.
75% of *Northern (*NE, NW and Yorkshire and Humberside) SMEs expect to be trading in a year’s time
73% of UK SMEs with staff on furlough intend to bring back all staff from furlough
Over half of UK SMEs expect their profits to increase
60% of UK SMEs intend to invest over the next year and only 20% intend to borrow
The research, which surveyed 760 Azets SME clients across the UK and the Nordics (401 in the UK), revealed that despite the economy, Covid-19 and competition ranking in the top three threats for UK SMEs, 68% feel positive about the UK’s economic outlook over the next 12 months and over half (56%) expect their profits to increase. Brexit remains firmly on the agenda in all regions outside London and South East where it was named as the third biggest threat.
There are further positive signs for UK SME growth and jobs with over half (56%) expecting to recruit more staff over the next year and 60% intending to invest over the next year.
Businesses in Scotland, the North East, North West and Yorkshire and the Humber are less optimistic than their counterparts further south about the economic outlook in general. 71% of London and South East SMEs feel positive about the UK’s economic outlook, in comparison to 60% in Scotland and 59% in the North East, North West and Yorkshire and Humber. However, overall the future for UK SMEs looks bright with 87% saying they expect to be trading in a year’s time. 6% said they’re unlikely to be trading and 7% were unsure.
As the UK went into lockdown last year, the government stepped in to support businesses during the pandemic. On balance across the UK, SMEs felt well supported (71%).
Other key findings from the report for Northern SMEs:David Travis, Regional Managing Partner of Azets in the North West said:
UK SMEs ranked (in order) their business models, the economy and international trade as their top three opportunities. For Northern SMEs key opportunities (in order) are business models, international trade and the economy
Financial health, adapting their business models and employee wellbeing were ranked as the top three priorities by UK SMEs. The top three priorities for NW SMEs were financial health, employee wellbeing and adapting business models.
71% of UK SMEs have felt well supported by the government during the pandemic. However in the North this dropped to 66%, the lowest of any region. Northern SMEs were also least likely (only 36%) to have accessed any liquidity assistance compared to their regional counterparts.
Only 20% of all UK SMEs intend to borrow over the next year.
“There is a robust level of optimism across the SME community and the investment and recruitment intentions are very encouraging. The disparity in optimism between Scotland/North and the South reflects the heavy weighting towards the service sector in the South, which is showing stronger and faster signs of recovery. Hopefully recovery in confidence in the North West will accelerate as the economy strengthens, entrepreneurs start to invest and employment increases. We’re certainly seeing an uptick in deal activity and plans for investment and recruitment among many of our SME clients.
“Clearly there are wider challenges with shortages of skilled labour, soaring raw material costs and the threat of inflation. SMEs will be adjusting their business models and considering innovative ways to reduce costs and their dependence on single supply chains. This is sound future-proofing and will help ensure they are well placed to capitalise on growth opportunities.”
The pandemic’s impact on wellbeing for SME leaders in the region
30% of Northern SME business leaders say they have a poor work/life balance with a third (34%) saying they spend over 13 plus hours a day working on or thinking about their business.
25% have experienced a medically diagnosed work-related health condition in the last 12 months in comparison with just 8% who have in London and the South East.
David Travis, concluded: “Our first SME barometer was conducted against an unusual backdrop. After a year of deep crisis and upheaval; with the vaccination programme accelerating across Europe and lockdown restrictions beginning to ease, the prospect of an economic recovery feels within our grasp. At the same time, plenty of uncertainty remains. Our research highlighted a stubborn optimism among SMEs about the prospects of recovery, coupled with a pragmatic awareness of the need to adapt to the ‘new normal’ post-covid.
“The biggest opportunity and biggest threat for SMEs is adapting their post Covid business model using technology and flexible working. Those who get this transition right will be in a better position to survive and thrive. Given the importance of ensuring that the SME sector continues to adapt and prosper as the economy recovers, these findings point to areas where further government policies are vital in delivering the support businesses need post Covid and post-brexit, right across the UK.
“The pandemic’s impact on the mental wellbeing of many SME leaders in the region is stark. Managing mental wellbeing and seeking help and advice – personally and professionally – is really important. If your business is showing signs of stress, seek support quickly. Acting early brings with it a broader range of options – the window of opportunity and available options narrows the longer that you leave it.”