The latest data from the Close Brothers Business Barometer reveals that SMEs have a mixed view of the economic performance expected in the coming 12 months.
When asked to describe the outlook, 45% of SMEs were concerned that the economy would slow down, but despite this 36% of those surveyed expect their business to expand in the coming year.
With businesses still recovering from the pandemic and navigating through increased costs of doing business, many have been dynamic in their business plans, ensuring that supply chains and relationships with customers have recovered and thrived.
With many now looking at investing in future growth, here are six tips if you are feeling upbeat but cautious:
1. Watch the economic data
Keep informed about trends that will affect your business over time. The Bank of England’s quarterly Inflation Report provides a detailed overview of the economy, while the Chartered Institute of Procurement & Supply publishes indices of business activity in different sectors.
2. Monitor costs carefully
When times are uncertain, the need to monitor costs becomes even more crucial. SMEs are increasingly looking targeting efficiency improvements, from energy through to automation.
Upskilling teams or investing in new technology could reduce costs, where time saved on administrative tasks could be beneficially used elsewhere.
3. Focus on productivity
SMEs are investing in business leadership and innovation to increase productivity. Having productivity of staff as a priority can have real benefits to both profits and company culture.
With many SMEs acknowledging that positive mental and physical health improves business performance, investing in this area can lower staff turnover, increase experience and improve relationships with stakeholders.
4. Don’t neglect investment
When times are uncertain, it is important to balance the need for future growth, whilst making difficult expenditure costs decisions to remain in touch with, or ahead of competitors.
5. Keep finance flexible
Your business needs strong financial foundations that will provide the flexibility required for you to respond quickly to changing market conditions. Don’t assume that your existing forms of funding will provide the agility required alone.
Regularly reviewing your partners and products means getting the best out of those relationships and ensuring your finance grows with your business.
6. Have detailed data available
While economic data is important, you know better than anyone what’s going on in your business. By analysing the performance of your company – and comparing it to previous trends – you’ll develop an in-depth overview to support strategic decision making.
