Gareth Magee: Small firms show strength amid uncertainty

Scott-Moncrieff partner Gareth Magee. Picture: Contributed

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With around 99 per cent of UK businesses classed as small or medium-sized (249 or fewer employees) it's fair to say that our economy is driven by SMEs.

Scott-Moncrieff has once again surveyed the UK-wide SME market, and gained valuable insights into how these, mostly owner-managed, businesses are faring and how they rate their prospects for the future.

Since last year’s survey, there has been a decline in business confidence. Just 59 per cent of SMEs across the UK, 69 per cent in Scotland, are confident about the general outlook for 2017. This contrasts with 77 per cent across the UK last year and 78 per cent in Scotland. In line with this assessment, confidence in meeting key performance indicators, such as revenue and profit targets, has fallen.

There are no prizes for guessing that the key concerns of SMEs are those also dominating the headlines. The strength of the UK economy and the potential impact of Brexit were the highest-ranking anxieties, with a continued shortage of skilled staff and the ability to extract profit from their businesses also affecting levels of optimism.

Despite this, growth is still very much on the agenda for many SMEs and our survey reports positive results, with 40 per cent faring better than expected last financial year.

SMEs are well-positioned to respond to a changing economic climate. They are generally well-run, nimble, businesses that can swiftly capitalise on any opportunities that arise, even in uncertain times. While other, larger, businesses may take time to debate their next move, SMEs can seize the opportunity to take swift and decisive action.

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Expanding their customer base, investing in staff, developing new products and services and investing in technology are the top priorities for businesses in 2017. So, it seems there are plenty of organisations out there seeking opportunities for expansion and investment.

While there’s no doubting that the future could test even the most optimistic business, the winners will always be those who respond with positivity and action. Opportunities will arise, and it is those who grasp them that will prosper.

While some will experience positive benefits as a direct result of the current climate, others will choose to adjust their business model to create them – whether that means boosting exports, increasing domestic production, adjusting supply chains, or developing new products and services.

One thing is for sure – whether they come from the domestic economy, the rapidly changing global political arena or the increasing threat of cyber-security issues, there are bound to be more challenges ahead. Thankfully most business owners are pragmatic. Although some SMEs will seek cost reduction, many will create new products, expand their customer base and spend more money on staff training and marketing.

If we were to be pessimistic, there is a danger that we will be defined by that, and it will become our reality.

It’s not the surprises that can make or break a business – it’s how you deal with them that counts.

Gareth Magee is a partner at accountant and business adviser Scott-Moncrieff

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