During the pandemic, SMEs worldwide assumed this was as bad as it got, and by this time things would have improved. In fact, 2023 seems to be even worse than the height of lockdown — in fact, the worst the economy has been since 2008.
Strangely, though, this doesn’t appear to be causing gloom among business owners. A recent survey suggested that the vast majority of SMEs in the international business community are optimistic about their future prospects.
Bad News — The Worst Year Since 2008
The 2023 Global Business Monitor, undertaken by Bibby Financial Services, shows the level of concern from SME owners and decision makers from nine countries, including the UK, about factors that are stifling business growth. This showed that principal concerns are inflation (55%), energy costs (49%) and uncertainty over local economies (28%).
According to Jonathan Andrew, Global Chief Executive Officer at Bibby Financial Services, “For small business owners, there is no one-size-fits-all solution to navigating the uncertain outlook ahead. What is clear across all markets is that SMEs need all the support they can get from both the private and public sectors.”
Good News — Optimism for the Future
In spite of what might seem like a gloomy outlook, a surprisingly large proportion of SME owners are positive about the future. 85% are confident about the rest of 2023, while 64% expect an increase in sales over the coming months.
These numbers vary considerably over the countries surveyed, however, with the UK near the bottom. Here, 54% expect a modest increase in sales, in contrast to 75% in Germany. In more general terms, more than 90% of SMEs in the Republic of Ireland expressed confidence about the future.
As a result of this, 89% of SMEs are planning to invest in their businesses this year. Popular areas earmarked for investment include sales and marketing, staff training and development, digital technology and IT.
Cashflow and Supply Chain — the Fly in the Ointment
As I explained in a recent post, one of the biggest threats to SMEs at the moment is the supply chain crisis, which is devastating many businesses’ cashflow. The result is that, despite the general optimism, 26% of SMEs don’t have enough cash to grow, while 10% aren’t in a position to operate on a day-to-day basis.
This has led many SMEs to seek financing solutions, either to support their investment plans or simply to keep above water. However, with interest rates rising and traditional lenders reconsidering their offers, SMEs are increasingly looking at alternative sources of finance — and, while some of these will be effective options, there’s the risk of spiralling down into debt.
A far more sustainable way of dealing with cashflow issues is to improve your credit control, ensuring you receive the income you’re owed. Give me a call if you’re struggling with unpaid invoices, and we can discuss how I’ll be able to help you.
