SME Growth in the UK

The recent economic situation has been bad for business, with many struggling entrepreneurs not finding the circumstances particularly favourable for growth and expansion. However, a new government initiative, coupled with a more positive outlook for the economy, should be seized upon by businesses who wish to mature. Young entrepreneurs could even capitalise on a Start Up loan, in order to find the necessary finance for their businesses.

Exporting for SME growth

The current climate of the UK economy would probably lead one to think that SMEs would struggle with trade at this time. Whilst that might have been true previously, there is now much for these companies to do to grow, as well as recent announcements to suggest that the economy might support growth, rather than hamper it.

The Department for Business Innovation and Skills and UK Trade and Investment have committed to raising the number of small businesses that export to 1 in 4 by the end of 2012. This premise is founded on several key benefits found by SMEs that export. For example, they can grow by almost 1/3 in just 2 years, 29 per cent of SMEs have seen a positive impact on their bottom line within 6 months of expanding into international markets and 54 per cent said growth exceeded their expectations. We have certainly seen HBVP’s client Biocrystal, grow due to their expansion from Croatia to the UK, which suggests that the conditions would be right for other SMEs to follow suit.

I’d recommend that SMEs very seriously look at expanding into their nearest international market (so the European continent if they are located in the UK) as the possibilities are vast. In addition, utilisation of a growing online marketplace can support and ease expansion into international companies. The Department for Business Innovation is very keen on emphasising how important this expansion is to SMEs, and these companies should capitalise on that.

Economic situation

An important factor to consider is the economic climate, which is looking tentatively positive. Inflation has fallen to its lowest in almost 3 years as of September. The retail price inflation, which includes some housing and tax costs, dropped from 2.9 per cent to 2.6 per cent.

This drop in inflation could potentially stimulate spending in the consumer sector, the prediction of which is certainly borne out with the recent statistics concerning the increase of the number of shoppers in non-food stores increasing by 1.2 per cent in September, marking the first month in which retail footfall has risen.

This is backed up by a prediction of Ernst and Young, who have released very tentative predictions about growth in Q3, due to a rise in consumer spending, up 0.6 per cent, most notably in high street sales, which were brought on especially early due to poor weather and a wealth of international travellers. This has been tempered slightly with their overall prediction for 2012, which is that there will be a fall of 0.2 per cent; however this has the optimistic message behind it of a rise for 2013 and 2014.

Conclusion

SMEs are often quoted as being at the backbone of British economy. Many may have felt especially squeezed during this difficult economic downturn, so I am feeling positive going forward, especially for those in the retail sector. With very cautious forecasts, it seems like we can believe in the possibility that we are reaching the end of the recession, especially with unemployment down to 7.9%. This is the time for SMEs to consider their growth plans and what new steps they can take in the wake of all the positivity being reported. The plans on the backburner can now be allowed to come to the front. These positive changes can allow these SMEs to flourish, and to reconsider their expansion and growth.