Greater London SMEs investing in third quarter

By Joe Mellor, Deputy Editor

SMEs are the first businesses hit by a recession but also the first to see improvement after the hard times. The BBC today (2/9/14) ran a news piece on the growth of the SME sector and their findings are supported by Bibby Financial services research.

They found the majority of small and medium sized enterprises in Greater London expect to invest in their businesses this quarter. The independent funder surveyed 1,000 businesses with a turnover of up to £25 million as part of its SME Tracker and 52 per cent said they will invest in the three months up to October.

One in five (20 per cent) are to invest in technology and equipment; 16 per cent said they will recruit new staff and more than one in ten (11 per cent) said they plan to invest in employee training in the next three months.

Paul Cunningham, spokesman for Bibby Financial Services in London, said: “These results are positive as they show owners and management teams investing in the long-term future of their businesses. The increase in those investing in new premises is a clear indication of these plans and it’s likely that the effects will be felt later in the year, which could spell more positive news in terms of GDP as we lead-up to 2015.”

One in ten SMEs plan to invest in new premises – up from eight per cent in Q2 – and more will focus on product design than in the second quarter of the year (14 per cent to 15 per cent).

When asked about expectations for the months ahead, four out of five (80 per cent) said they expect to see sales stay the same or grow over the next three months and only eight per cent foresee a decline in orders in the three months leading up to October.

Gross domestic product estimates announced in July show the UK returning to pre-recession levels and Cunningham says the latest findings highlight longer-term growth aspirations among smaller businesses in the region.

Cunningham said he would also expect findings to be reflected in employment figures later in the year but cautioned that aspirations need to be coupled with finance to support growth: “If businesses have the financial means to grow, then undoubtedly they will need to take-on staff, move to larger premises and buy equipment and machinery, which all have a positive multiplier effect on the economy.

“But too often, ambition is stifled by cashflow issues, such as late payment or customer insolvency so having funding in place is a huge advantage and can facilitate these plans.”

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