Channel companies hoping to pitch products to UK SMEs could be out of luck.
New figures suggest SMEs are postponing their investment plans as they grapple with increased costs and inflationary pressures.
The Enterprise Nation Small Business Barometer found a 26 per cent drop in businesses looking to raise seed capital under £10,000 in the year’s second quarter. In comparison, the number seeking between £10,000 and £20,000 rose by eight per cent, suggesting more businesses are self-funding growth plans.
Despite that, growth expectations have been revised for this quarter by six percentage points, with 27 per cent expecting to grow by at least a quarter in the next three months, up from 21 per cent.
But a third of founders still hold down full or part-time employment (33 per cent) to fund their enterprise, which rises to 57 per cent amongst 18- to 24-year-olds.
SME support platform Enterprise Nation Emma Jones said: “Small business founders are holding their nerve and taking a cautious approach to taking on funding whilst using their cash by holding down a job.
“This is a sensible way to test an idea in the early stages, so it’s good to see that businesses are seeking higher investment later on when they are ready for it – and they are confident the time is right for them.”
She continued: “We have seen that businesses are still hungry for cash, but they are actively seeking grants and accessing free support to get them to the next level. It’s one of the reasons we launched our grant fund earlier this month to support these early-stage businesses with real ambition.”
Businesses in the West Midlands are most optimistic about growth in the UK, with 38 per cent of them saying they expect to grow by next quarter, followed by the South West (30 per cent) and the South East (29 per cent).
More than 64 per cent of Welsh and 54 per cent of Scottish-based firms said they expected to stay the same for the next three months, but the picture is very different in the North East, where a quarter (25 per cent) of all firms expect to shrink along with around 22 per cent in the East Midlands.
More than 45 per cent of Tech firms said they were expected to expand, with 28 per cent of events companies saying they were very likely to develop. General retailers were most pessimistic, with 17 per cent saying they were unlikely to expand.
Sales are down by three per cent, with sales falling most rapidly in the East Midlands and Scotland, where 52 per cent reported a cost-of-living-related drop, a 14 per cent increase on the last quarter. In the North East, 50 per cent said sales figures were down.
General retail and fashion have been the most brutal hit, with 61 per cent in both categories seeing sales slump.
Almost half of all small businesses now see themselves as digital, with 42 per cent of companies saying they considered their business digital. That rises to 61 per cent among the 25 to 35 age group and 57 per cent among 18 to 24-year-olds.
Businesses in the South East (49 per cent) and London (48 per cent) were most likely to be digital, but that reduces to 35 per cent in Yorkshire and the Humber and the East Midlands.
