Seven in 10 (70%) small to medium enterprises (SMEs) are concerned about rising costs this year, with 42% ‘very concerned’ as inflation continues to erode bottom lines, research from Shawbrook has revealed.
When quizzed on their main focal points over the next year, 46% agreed that managing rising costs would be a priority.
Only 2% of respondents were not concerned at all about rising costs.
While inflation topped the list of concerns, both rising interest rates (67%) and general economic uncertainty (69%) were pain points.
Further down the list, SMEs also named energy bills (50%) and paying off debt to balance the books (54%) as key worries.
As inflation has come down from the double-digit highs of last year, Shawbrook noted that some of these concerns would likely soften in the next 12 months.
In fact, senior decision makers were already considering significant growth plans in the year to come.
Over the next 12 months, 41% were are looking to grow and hire new staff, 42% were aiming to upskill existing staff members and a third (32%) planned to bolster leadership teams.
17% considered international expansion, and 21% were preparing for a digital transformation in the next 12 months.
Nearly one in five (17%) senior decision-makers were considering an exit strategy in the next 12 months, and 16% were planning to acquire a new company as a road to further growth.
Neil Rudge, head of enterprise at Shawbrook, said: “The economic challenges that SMEs have faced in the past year have been well-documented and our research indicates that despite positive indicators, we are still in somewhat of a no man’s land economically.
“Senior decision makers at the helm of the UK’s SMEs are continuing to monitor the impact that rising costs are having on their business and are adjusting their plans accordingly.
“However, the good news is that the economic picture is currently predicted to brighten this year and the plans that SMEs are making to grow their businesses in the next twelve months are a clear indication of optimism among this community.
“Indeed, if inflation continues its downward trend and rates subsequently start to come down, as has been widely predicted, we could see many SMEs push the button on plans that had been put on ice in 2023.
“For businesses that are putting together their plans for the next year, consulting with a specialist lender who can provide a tailored funding solution will help to ensure those plans are achieved.”
