SMEs look at the future with growing confidence according to new research

New research from banking and finance company Aldermore reveals further signs of growing confidence and investment plans from small and medium-sized businesses in the UK. Despite external factors such as supply chain issues and the ongoing impact of the cost-of-living crisis, SMEs plan to spend an average of £111,175 on growth strategies, equating to a £633m total spend for all UK SME businesses.

More than a third of UK SMEs are planning to invest in new equipment over the next year. Businesses are also continuing to embrace the shift to online, with 35 per cent planning to improve their online presence and 29 per cent investing in digital marketing.

Nearly a quarter of SMEs plan to diversify into new products and services, whilst one in five will invest in marketing and events. Meanwhile, a quarter will prioritise training for staff and 15 per cent plan to invest in recruitment.

The willingness of UK SMEs to invest in their business is evident in recent lending figures. Gross lending to SMEs stood at £4.8 billionn in Q4 of 2021, broadly unchanged from the previous quarter and seeing a £22.6bn total for the whole of last year.

Expanding their customer base over the next 12 months is the main priority for half of UK SMEs. Business leaders have had to consider business expenses, driven by the impact of the cost-of-living crisis; 45 per cent of SMEs will be focused on reducing them to lessen the impact on their bottom line.

More than a third of UK SMEs plan to fund their investment with business savings. However, despite specialist products being available, many business owners are continuing to dip into their own pockets to fund their investments, with nearly half funding growth using products designed for personal use such as overdrafts or personal lines of credit, such as credit cards.

Tim Boag, group managing director, business finance at Aldermore, said: “It’s encouraging to see that SMEs are planning to invest significantly in their business during the next year. Despite broader economic uncertainty, the cost-of-living crisis and ongoing supply chain issues, business confidence remains high, and SMEs are continuing to look to the future: to their recovery, growth and even transformation.

“However, it’s concerning that many SMEs are relying on products not designed for business use to fund their investments. Business leaders should explore specialist funding options designed with their specific challenges in mind, such as invoice finance or asset finance."