New research has revealed the investment and growth plans of SMEs in the UK. Despite the ongoing cost-of-living crisis, SMEs plan to spend an average of £321,000 on growth strategies over the next year. One in eight SMEs plan to spend over £1 million investing in growth.
A third of businesses want to expand their customer base and grow their current products and services in 2023, while also reducing costs to combat the cost-of-living crisis.
To reach their goals, business leaders plan to invest in their online presence. One in four SMEs will put money into improving or building websites and apps over the next year. This is in addition to investing in digital marketing.
Interestingly, following the ‘Great Resignation’ fears that saw SME-leaders prioritise talent spend in 2022, talent acquisition and increases to employee salary and benefits are likely to see the least investment over the next year.
Business leaders continue to put hands in their own pockets to invest
SMEs will often turn to business savings or various forms of business finance (e.g., asset finance – 11%) to meet their goals. However, nearly two out of five SMEs will turn to their personal savings and over one in ten will use their own overdraft to meet business costs.
Barriers to growth
Despite optimistic plans to invest heavily in the coming year, the biggest concerns SMEs are faced with are high energy costs and double-digit inflation rises. This will represent the biggest barrier to business growth in 2023.
Those concerned about inflation costs estimate it could lead to delays in existing projects, missed opportunities for growth, and difficulties securing new deals.
Tim Boag, group managing director of business finance at Aldermore said: “SMEs are the backbone of our business community and their ambitious growth plans over the next year bodes well for the economy, however they also face challenges brought about by high inflation and soaring energy costs.
“At Aldermore, we’ve supported SMEs through challenging times. It’s great to see from their plans that a digital presence for many has become a major priority, as consumer expectations have evolved post-pandemic.
“For business leaders, there are many sources of investment, be it utilising savings or accessing a range of specialist finance products; and at Aldermore we remain fully committed to backing businesses to realise their ambitions.”