SME confidence slowly returns but risks remain
The UK's small businesses are planning to invest in the opening quarter of 2018, as confidence in market conditions slowly returns.
The latest SME Confidence Tracker from Bibby Financial Services reveals that confidence levels are at their highest point since 2016, and that firms are prioritising securing new staff.
However, it comes against a backdrop of rising operational costs and growing competition, meaning a degree of risk is attached to any such expansion.
Planned investment expenditure for the first quarter is up 14%, while records show that four in five businesses chose to invest in the final three months of 2017.
Of that figure, more than two fifths of firms focused on staff upskilling and training, a trend that is expected to continue into 2018.
Investment in digital technology is a key focus area for 2018, as is developing new supplier networks and investing in new equipment.
But businesses will still need to be careful, as nearly one fifth of firms see rising costs as a major concern, and a similar proportion view increased competition as a threat to their business.
Overall confidence levels remain low, especially when compared to 2014 or 2015 levels, although it does appear that SME owners are looking to the future.
Investing too heavily too early could place businesses under severe financial strain in the months ahead and may even threaten insolvency, so careful financial management is needed.
The uncertain nature of the economy and the ambiguous nature of Brexit negotiations mean that an element of risk exists and this has also continued to influence confidence levels.
Those facing financial difficulties should act quickly by seeking relevant advice or by undertaking options reviews to see what approaches they could follow.
It may be a case that solutions are available which had previously not been considered, and a corporate insolvency practitioner should be best placed to provide assistance and guidance.
By Phil Smith