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Britain’s youngest businesses drive sector confidence for 2018 PDF Print E-mail
Wednesday, 22 November 2017
Forget notions that experience and scale are key factors for businesses in tackling Brexit uncertainty. New research from Hitachi Capital Business Finance reveals that it is the country’s youngest small businesses that are now the driving force behind business confidence for the months ahead. 

The latest quarterly findings from Hitachi’s Business Barometer reveal that small businesses that have been trading for less than five years are nearly four times more likely to predict significant growth in the next three months than those that have been trading for more than 10 years (15% and 4% respectively).

The data suggests that age not size of a SME has a direct bearing on business confidence. For the third consecutive quarter, the proportion of young businesses predicting growth (significant or modest) has risen, peaking at 54% this quarter. This is in contrast to the overall figure for the SME sector, where those predicting growth this quarter is much lower (38%) and has remained static for the last nine months.

The research also found that young enterprises were the least likely to be concerned about market uncertainty (25% Vs. 31% businesses trading for 10 years or more), the value of sterling (8% Vs. 10%), or the impact of red tape (9% Vs. 19%) – the three issues that were top concerns for the period among small businesses in general.

These findings come at a time when industry sector has become less of a determinant for SME growth, as a general convergence in growth forecasts is noted in the latest data. Sectors where growth predictions were lowest during the first half of the year are seeing confidence rise for the next three months, whereas sectors where growth predictions were most bullish during the summer months now see confidence levels fall. With the exception of agriculture and transport, which have seen quite steep falls in confidence, the confidence gap between sectors noted in the summer has closed – with the percentage predicting growth across sectors ranging between 35% and 46%.

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance commented: “Brexit has dominated the business headlines for much of this year and there has been a watchful eye on how major corporates will react. Over the course of 2017, our research has shown the SME sector to have a relatively bullish attitude to Brexit, many seeing opportunity from uncertainty and also looking to launch new services and open up new markets: this at a time when many larger businesses are reacting to the latest Brexit developments in a more cautious way.

“Our latest research suggests that the youngest of the nation’s small businesses are those most likely to predict growth for the months leading into 2018. Many are digitised and still evolving their service lines and customer footprint and are more agile in being able to adapt to a changing market environment. This is positive for the economy at large, but it means 2018 will be a year when small business finance will be even more sharply under the spotlight. If younger enterprises are to be growth drivers, then their ability to secure the right kind of funding and when they most need it will become vital not just to the vibrancy of the small business sector, but also the general health of the broader economy as well.”

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