SMEs ready to pivot to beat downturn in economy
SMEs are less optimistic about the economy but will pivot their business model in order to focus on growth, according to new research.
The Azets SME Barometer reveals a fall in optimism about the economic outlook across the UK and Nordics from 68% last summer to 51%.
UK SMEs are the least positive with 40% expecting the economic climate to worsen.
But 62% of all SMEs expect their turnover to increase during the next year and 53% expect profits to improve.
Soaring cost inflation is the biggest day-to-day challenge facing the SME community alongside serious recruitment problems.
Almost three-quarters (71%) are not reducing their carbon footprint and 85% not currently measuring the carbon footprint of their business. This is despite legislative and educational measures to encourage them to do so.
- Confidence in the economy has fallen 17% since 2021
- 62% of SMEs expect their turnover to increase
- Cost inflation is the biggest day-to-day challenge facing SMEs
- Two-thirds (64%) of SMEs are unable to recruit people with the right skills
- 61% of SMEs say digitalisation is key to business efficiency
- 45% of SMEs are not resourced for Environmental, Social and Governance (ESG) issues
- 71% of SMEs are not reducing their carbon footprint
- 16% of UK SMEs have experienced a cyber-attack or serious data breach
Peter Gallanagh regional CEO for Azets in Scotland, said: “The Covid crisis has been particularly tough on SMEs, not only because they are more prevalent in the worst-hit sectors but also because they have fewer buffers – including access to liquidity – than bigger organisations.
“It is therefore no surprise optimism around the economic outlook has reduced, impacted by the potential for new Covid variants and the global cost of living crisis.
“The impact on the global economy and the SME sector will be immense when we start to analyse the effect of sanctions, price fluctuations on commodities and disruption to the global supply chain.
“Despite this new uncertainty, SMEs remain committed to pivoting their business models and embracing digitalisation as the biggest opportunities to fuel growth.
“It is this flexibility and agility that will be key for SMEs as they continue to build their resilience and pursue their growth plans.”