04 September, 2015
Senior decision makers from GB SMEs predict average increase in turnover of 37% – the equivalent of £2.4 million – over the next five years, according to the 2015 Business Growth survey from Santander Corporate & Commercial1
Half of senior decision makers from SMEs see growing their business as the key short term priority, while survival of the business falls down the list of priorities
One in five SMEs are looking to expand internationally
SMEs based in the East Midlands are the most optimistic, predicting an average increase in turnover of 109% over the next five years
Senior decision makers from SMEs are predicting strong levels of growth over the next five years, according to latest Santander Corporate & Commercial Business Growth annual survey1. It found that small and medium businesses with up to 249 employees are predicting average turnover growth of 37%, the equivalent of £2.4 million, over the next five years.
Small businesses 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.
More than half (52%) of business owners are confident enough to focus on organic growth as the most important immediate short term priority. The findings also show companies are keen to retain key staff as the economy picks up: nearly one-in-three (31%) businesses state that retaining existing staff is a priority in the short term.
The survival of their business, which was the top short-term priority in 20142 (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 to 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 last four years. Nearly one in five (18%) describe international expansion as the ultimate aim for their business compared to 6 per cent in 2014. Nearly a third (29%) of SME decision makers in London are planning international expansion, compared to just one in ten (12%) of SMEs in the East Midlands.
Regional growth (28%) remains the most popular overall business aim, with selling the business (11%) also a popular choice.
|What is the ultimate aim for your business?|
|To build it regionally||28%||25%||34%||21%|
|To build it internationally||18%||6%||3%||3%|
|To sell it||11%||3%||5%||2%|
|To sell it and retire||10%||7%||19%||25%|
|Source: Santander Business Growth surveys, 2012-2015|
Despite the strong optimism and renewed business confidence, businesses still report facing challenges. A tough trading environment was seen as a challenge to growth by GB businesses, cited by 27% of respondents, although this is down from 47% in 2014. The ability to hire and retain the right staff also remains a challenge, cited by 17% of business owners, compared to 14% in 2014. Access to capital (11%) was another concern reported by SMEs; however, the number reporting this as a challenge is down significantly from previous years (25% in 2014; 26% in 2013).
Mike Reeves, Joint Managing Director of SME Banking at Santander, said: “It’s extremely encouraging for UK plc that SMEs, the lifeblood of the economy, are predicting strong growth over the next five years. It is particularly promising that nearly a fifth are focused on international expansion, as exporting our products and services overseas is key to ensuring a stable, resilient economy.
“Santander is committed to helping businesses prosper and has been a consistent supporter of businesses in the UK, with lending over the last 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, SMEs based in the East Midlands are the most optimistic, predicting an average increase in turnover of 109% over the next five years. SMEs in the North West and South East are the most conservative, forecasting 14% and 18% growth respectively.
|Regional growth - expected five-year annual growth (%), ranked by region*|
|East of England||64%|
|Yorkshire and Humberside||60%|
|Source: Santander Business Growth 2015*|
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Notes to Editors
1 Research conducted by YouGov among 1018 companies with a headcount of up to 249 employees in July 2015.
2 Research conducted by BDRC Continental among 500 companies with a turnover of over £50,000 between 2-6 June 2014 using an online methodology.
3 Research conducted by BDRC Continental among 500 companies with a turnover of over £50,000 between 3-13 June 2013 using an online methodology.
4 Research conducted by BDRC Continental among 502 companies with a turnover of over £50,000 between 6-13 June 2012 using an online methodology.
* Please note estimated figures for Northern Ireland, North East England and Wales have been excluded due to insufficient sample sizes
Santander UK is a financial services provider in the UK that offers a wide range of personal and commercial financial products and services. It has brought real competition to the UK, through its 1|2|3 products for retail customers and relationship banking model for UK SMEs. As at 30 June 2015, Santander UK was the most switched to bank, attracting 1 in 4 new retail customers. The bank serves more than 14 million active customers with c. 20,000 employees and operates through 900 branches and 68 regional Corporate Business Centres. Santander UK is subject to the full supervision of the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in the UK. Santander UK plc customers are protected by the Financial Services Compensation Scheme (FSCS) in the UK.
Banco Santander (SAN.MC, STD.N, BNC.LN) is a leading retail and commercial bank, based in Spain, with a meaningful market share in 10 core countries in Europe and the Americas. Santander is the largest bank in the euro zone by market capitalization and among the top 12 banks on a global basis. Founded in 1857, Santander had EUR 1.51 trillion in managed funds, 12,910 branches and 190,000 employees at the close of June 2015. In the first half of 2015, Santander made ordinary attributable profit of EUR 3,426 million, a 24% increase.
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