For almost two years, the UK's small and medium-sized enterprises (SMEs) have experienced uncertainty and economic turmoil due to the coronavirus pandemic.set finance could
Yet, based on recent research, optimism among SMEs is growing. There's increasing confidence that a corner has been turned, that there will be a significant growth in customer demand heading into 2022 and beyond.
According to the latest Barclaycard Payments SME Barometer quarterly, 54% of SMEs in the UK expect an increase in revenue in the fourth quarter. This is when matched against their third-quarter performance. Furthermore, 29% of SMEs anticipate the Christmas period to be their most profitable since 2016.
Do fears over lockdown still remain?
Clarity. It's a word the British government likes to ignore. Add in the continual evolution of the coronavirus – the latest major development being the Omicron variant – and the flip-flopping of rules, and the prospect of another lockdown is one that continually looms over UK business owners.
Despite the fears of another economy-crippling lockdown occurring, the general view is cautious optimism that the worst has already been experienced. Ultimately, the UK is already in substantial debt. The pandemic has also had a widespread detrimental effect on the general public, with job loss, loneliness, and depression all becoming prominent issues. Can the UK afford another lockdown? The answer, at least for many SMEs, is an unequivocal "No".
It's true: there is seemingly no defined exit plan from coronavirus restrictions – or a clear government strategy in general. There's also the unpredictable nature of the coronavirus itself to contend with. However, confidence in a rise in trade and business opportunities currently overshadows the uncertainty that persists.
What are businesses investing in?
With this confidence, businesses are planning ahead. 54% of SMEs believe surviving the pandemic has made them more resilient, to the point that it has assisted in future-proofing their operations. This has also led to them exploring new investment opportunities.
As for what businesses are planning to invest in, the first area is to hire more staff. With job loss being one of the biggest issues caused by the pandemic, the hope is that an upturn in trade can create new career opportunities.
Another area SMEs plan to invest in is technology. With the continual growth in new software and tools, and with the way these can significantly improve efficiency, accuracy, and other business aspects, it's no surprise this is where SMEs plan to spend their money. Other companies are also hoping to expand their product range, improve their approach to sustainability, and conduct merger and acquisition activity.
What funding solutions are they exploring?
To achieve their investment goals and secure their long-term future, funding solutions are a must for SMEs. A strong funding base is required, as uncertainties will still exist even in a post-pandemic world.
A traditional loan from a bank can work for some small and medium-sized businesses. However, SMEs need to be strategic. They need to explore other areas in terms of funding to strengthen their financial position.
One of the most prevalent funding solutions they are exploring is invoice finance. This is an ideal option to have readily available, especially for a business that deals with outstanding invoices on a frequent basis. Rather than waiting around for customers to pay their bills, they can use invoice finance to quickly release funds. It's a great solution for avoiding potential cashflow issues.
Asset finance is another funding pick that's high on the list for SMEs. By using this financing, which allows for the immediate purchase of new vehicles, machinery, technology, and so on, a business can ramp up its growth significantly. They don't have to wait around and save before making these substantial investments and can instead get the resources they need when they're needed.
TSF is a commercial finance broker. Having helped many SMEs over the years, we possess the skills and knowledge to line up businesses from all industries with their ideal funding solution – whether that's invoice finance, asset finance, or various other financial products.
Are you ready to leave the pandemic behind and move on with your business? To find the perfect funding solution for your needs, don't hesitate. Contact us today to book a meeting.