Over a third of SMEs experiencing genuine growth
The recovering economy appears to be having a dramatic effect on SMEs, with more than a third recording growth during the last quarter.
According to the latest SME Risk Index, 37% of SME decision-makers said their businesses expanded during Q3.
Furthermore, 56% of British SMEs are confident the economy will continue to improve during 2014, a massive increase on the 37% who felt the same in the corresponding survey last year.
The level of SMEs that are concerned with the economy has also fallen, down to 68% in October 2013 compared to 84% in the same month of 2012.
It is a sign that business recovery and restructuring methods are proving to be successful in many of the companies that have used them during the last 12 months.
Key challenges still exist
However, many SMEs are still concerned about a number of workplace challenges. The number of companies admitting this rose from 8% to 40% in the last quarter compared to the same stage last year.
Issues such as the availability of a skilled workforce, the retention of talent, employee morale and stress levels were named as the leading concerns.
Other issues highlighted included an increase in domestication, greater regulatory requirements and inflation as SMEs are afraid of rising costs which could dent their profit margins.
Richard Coleman, SME director at Zurich, believes SMEs can assist with the economic recovery further but highlighted that any growth should be sustainable.
“While it's very encouraging to see levels of economic concern and perceived levels of business risk both at their lowest points since the index began, the focus should now be on making recent economic growth sustainable,” he explained.
“It's about ensuring that the business environment out there for British SMEs remains as stable as possible, so as to provide a solid base upon which businesses can invest and flourish.”
A failure to encourage sustainable growth could place SMEs under pressure and lead to an increase in those restructuring or requiring insolvency practitioners.
By Phil Smith