The Future Looks Bright for UK Small Businesses

Despite warnings north of the border that business insolvencies could be on the up, a recent survey by R3, the trade body for insolvency professionals, has shed light on the prospects of small businesses across the UK. And, the good news for many is that the future looks bright.

R3, which is made up of 97 percent of the UK’s insolvency practitioners, surveyed 1,000 small businesses between the 3rd and 13th November 2014, and has revealed that levels of UK business growth remain near record highs.

According to the research, two-thirds of businesses have reported at least one key indicator of growth. Meanwhile, business distress levels have stayed close to record levels, with just 35 percent of companies reporting at least one key indicator of distress, down from 64 percent in March 2012.

Disparities across the regions

Although the overall signs for small and medium sized UK businesses remain positive, there were significant disparities between the regions. The performance of Yorkshire firms is particular bullish, with 85 percent of businesses in the region reporting at least one key indicator of growth.

In the North as a whole, 71 percent of businesses are showing one or more growth indicator. This is slightly behind the Midlands (74 percent) and well ahead of SMEs in the South of England (54 percent).

In three of the past four R3 surveys, signs of growth have been most prevalent in the Midlands. Nevertheless, all regions have seen a marked improvement in growth since the beginning of last year. The difference is that while growth in the Midlands has been particularly resilient, levels in the North and South appear to have levelled or even dropped off slightly in the latter part of the year.

UK businesses showing signs of growth

The results of the small business growth indicators were as follows:

  • Investing in new equipment – 36 percent
  • Increased sales volumes – 40 percent
  • Business expansion – 38 percent
  • Increased profits – 34 percent
  • Growth in market share – 28 percent
  • One of more of these key indicators – 65 percent

UK businesses showing signs of distress

The signs of distress reported by small businesses include:

  • Decreased profits – 20 percent
  • Decreased sales volumes – 14 percent
  • Regularly using max overdraft – 12 percent
  • Falling market share – 10 percent
  • Redundancies – 8 percent
  • One or more of these key indicators – 35 percent

Big businesses are also performing well

The R3 survey has also revealed that larger businesses across the UK are continuing to display more signs indicative of growth than their smaller counterparts. 88 percent of larger businesses (those with 250+ employees) are experiencing one or more growth indicators. This figure is up from 82 percent in June 2014, and compares favourably with the growth indicators experienced by sole traders of just 46 percent.

Growth has become more balanced

Commenting on the results, Phillip Sykes, Vice President of R3, said: “This survey marks a year of record high signs of business growth and record low business distress.

“Signs of growth are also becoming more balanced. Last year many businesses were reporting increasing sales and new investment, but not increasing profits or business expansion. These latter two indicators have now caught up.

“Businesses do still need to be careful not to run before they can work. Cashflow can become an unexpected issue during times of recovery. However, signs of business distress have remained very stable over the past year having tumbled before that, and most indicators are at a record low.

“There is still some cause for concern, with 12 percent, equivalent to 206,000 businesses, using their maximum overdraft on a regular basis”.

If you are one of the unfortunate companies suffering poor cash-flow or your business model is simply not viable and ran its course then call 08000 746 757 for no strings attached help and assistance.