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opinion Region‘s SMEs predict 18% growth over next


How optimistic are you about your company‘s prospects into 2016 and beyond?


If you follow the results of an Optimism Index published by BDO, you will have noticed that long-term business confidence – beyond this year – has fallen significantly. Indeed, it has been on a downward trend for five consecutive months.


And yet, if you follow a South East Business Activity Index published by Lloyds, you might feel a great deal more upbeat about economic conditions across the Thames Valley and Solent areas.


The Lloyds Index shows that output of the region‘s manufacturing and services sectors has been registering growth since the beginning of 2013 – and, moreover, this region‘s economy is growing faster than the UK average.


The survey also reveals that incoming new business is on the rise. This is particularly heartening – indicating that future increases in output are on the horizon – and that we are destined to enjoy a pretty positive 2016.


These two sets of findings are not necessarily incompatible. They might show that while business is actually, in the factories, offices and workplaces of the region, going great guns, and likely to continue to do so, bosses are loathe to let their guard down.


Their nervousness comes, perhaps, from a perception that they are going to be knocked off course by global factors – whether it‘s China or Europe. They feel the recovery is like a sandcastle, being built too close to the sea. A change of tide, a strong wave and it could all disappear in a moment.


Our advice is to turn off the dispiriting TV news and just get on with it. You‘ll be surprised how much more optimistic you‘ll suddenly feel.


David Murray Publisher


www.businessmag.co.uk five years


Small and medium-sized business senior decision makers in the South East are confident about their five-year growth prospects, according to the latest Business Growth survey from Santander Corporate & Commercial. The research found that small and medium businesses with up to 249 employees in the South East are predicting 18%, or the equivalent of £1.5 million turnover growth, over the next five years.


The survey suggests a strong outlook for short- term growth, with more than half (51%) of SMEs in the South East reporting growing the business organically as an immediate priority. Nearly a third (31%) wish to introduce new products or research and development, which is the highest of any region in Great Britain.


On a national level, senior decision makers from SMEs are predicting strong levels of growth over the next five years, with small and medium businesses with up to 249 employees predicting average turnover growth of 37%, the equivalent of £2.4m, over the next five years.


Small businesses in Great Britain are the most optimistic, forecasting an average increase in turnover of 69%. This compares to medium- sized businesses which are predicting an average increase in turnover of 25% over the next five years.


The survival of their business, which was the top short-term priority in 2014 (57%), is now a priority for 30% of SME senior decision makers, suggesting more companies are now focusing on growth. More than a quarter (27%) of firms said they were focused on introducing new products while nearly a fifth (18%) said they were looking to hire new staff – compared with 12% who were prioritising this in 2014.


This improving business confidence is leading to more companies looking internationally for growth than any point in the past four years. Nearly one in five (18%) describe international expansion as the ultimate aim for their business compared with 6% in 2014. Regional growth (27%) remains the most popular overall business


aim for SMEs in the South East, with building the business internationally (18%) also a popular aim.


Despite the optimism and business confidence, businesses in the South East still report facing challenges. A tough trading environment was seen as a challenge to growth cited by 28% of respondents. The ability to hire and retain the right staff (22%) and access to capital (15%) also remain key challenges cited by business owners in the South East.


Gwyn Price, regional director, South East, Santander Corporate & Commercial, said: “We are encouraged to see that SMEs in the South East are forecasting growth over the next five years. We are particularly impressed to see that South Eastern SMEs are planning to introduce the most research and development or new products of any region in Great Britain.


“Santander is committed to helping businesses prosper and has been a consistent supporter of businesses in the UK, with lending over the past four years growing by an average of almost 9% per year. Our innovative Breakthrough product suite, which was upgraded earlier in 2015, is designed to support the UK‘s most ambitious, fast-growing businesses while unique tools and services such as the trade portal and our trade missions have been designed to help more firms export and trade internationally.“


SMEs working in the hospitality and leisure industry are the most optimistic in terms of different business sectors, predicting an increase in turnover of 99% over the next five years. This is closely followed by retailers, who predict 85%. Those in the construction (27%), manufacturing (19%) and IT and telecoms industries (15%) are also forecasting significant growth over the next five years.


In terms of the regional picture, while SMEs in the East Midlands are the most optimistic, SMEs in the North West and South East are the most conservative, forecasting 14% and 18% growth over the next five years respectively.


In the November 2015 issue of The Business Magazine


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THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2015


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