Author: Marketing

Scotland’s smaller businesses continue to face a range of challenges amid the ongoing pandemic, but as the mood shifted towards recovery last year, we saw a notable upturn in the demand for finance. Equity investment, in particular, provided companies in Scotland with a platform for growth and development.

According to new data, published by the British Business Bank in its eighth annual Small Business Finance Markets report, equity investment in Scotland’s vibrant community of smaller businesses had soared to £403 million by the end of September – more than double the same period in 2020. A total of 147 equity deals were recorded, equating to 8 per cent of the UK’s equity deal activity – higher than Scotland’s 6 per cent share of the business population.

Across the rest of the UK, there was a similar increase in equity investment, with overall equity deal values on track to double from the £8.8 billion total seen in 2020. By quarter three, Scottish investment was already 42 per cent ahead of the total £283m registered during the full 12 months of 2020.

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Despite the positives here north of the border, our research highlights that geographic imbalances remain across the UK with external finance concentrated in London, where firms attracted 70 per cent of 2021 Q1-Q3 investment value. This only underlines the importance of ensuring that smaller businesses at any stage of growth can access the funding they need to achieve their goals, regardless of their location.

Helping to address this, alongside a range of programmes already in place, the UK Government announced £150m to provide a new fund for Scottish businesses as part of the October 2021 Spending Review. It will be administered by the British Business Bank and we will be working closely with Scottish Enterprise, the Scottish National Investment Bank and other local stakeholders to deliver this increased support.

As well as the increase in equity deals, the study also showed us that bank lending is close to returning to pre-pandemic levels. In terms of post-pandemic recovery, the British Business Bank’s report suggests there could be continued economic recovery throughout 2022, with strong demand expected for investment to fuel business growth. Although 2022 may still provide a challenging environment for some businesses, many others report that they are seeking to pivot towards growth, improve productivity and transition to a net zero economy.

Providing access to finance will play a big part in ensuring the UK economy continues to grow sustainably, but there are also a number of factors we need to consider that might prevent certain individuals or groups in society from being able to access funding. For example, that the report reveals that while ethnic minority-led businesses are more open to using finance, and more ambitious for business growth, access to finance remains an issue, and they are twice as likely to see access to finance as an obstacle to running their businesses. Additionally, the appetite for using external finance among female entrepreneurs has significantly increased, but it remains lower than for smaller businesses run by men.

The need to level the playing field, both in geographical terms and across under-represented groups is clear. We are committed to supporting entrepreneurs to overcome any hurdles they might face, whether it is knowing how to apply for finance, understanding what types of finance are available to them, or supporting them with the applications process.

For some, 2022 may be another challenging period for their businesses. However, we know that many are tentatively optimistic, still targeting growth and have big plans to make their ambitions a reality after two very uncertain years. Improving access to finance can only help smaller businesses to get there and our aim for this year is to help them on that journey.

By Mark Sterritt

Source: The Scotsman

A survey of more than 2,000 UK-based small and medium-sized businesses (SMEs) has found that most are feeling pressure to improve their sustainability credentials, but one-third believe it will be too expensive for them to take action this year.

Conducted late last year by tech and software firm Sage, the survey covered 2,040 decision-makers at SMEs in the UK, with the results being published this week.

Half of the respondents said they see sustainability as “important” to what they do, with 13% describing environmental issues as “business-critical”.

Yet just one-quarter of the respondents said they expect their business to become more environmentally sustainable in the next 12 months. The most common challenge to implementing measures to improve environmental outcomes was cost. One-third of the survey respondents said they think the changes they want to make would be too costly to implement at present – particularly with the costs of raw materials and energy increasing.

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The other most common challenges were found to be a lack of time to dedicate to sustainability, cited by 27% of respondents, and a lack of in-house skills, raised by 25%. This latter point resonates with separate, recent research from the SME Climate Hub, which polled 194 SMEs and found that two-thirds do not believe they have the right skills and knowledge in-house to reduced emissions and build climate resilience.

Many of the businesses surveyed by Sage acknowledged that failure to show sustainability leadership could prevent them from meeting the changing demands of key stakeholders. Almost one-third (29%) said they feel pressure to become more sustainable from customers, while 26% feel pressure from the UK Government and 23% feel pressure from their staff.

Common pressure areas include talking publicly more about the overall impact of the business, and providing more evidence that products and services are low-carbon or otherwise bear some kind of ‘green’ credentials.

The findings broadly echo those from a separate, similar study conducted by bank NatWest, which published its results in January. That study revealed a drop in the proportion of SMEs positioning environmental sustainability and a priority issue in the short term, with Covid-19 and the energy price crisis taking precedence.

SME support

The UK Government has already published guidance on how SMEs can and should measure and report emissions, following a call to action from Prime Minister Boris Johnson in May 2021.

Other supporting tools include an online hub enabling businesses to access practical information on how to approach the net-zero transition, from O2 and the British Chambers of Commerce; and the SME Climate Hub, which recently worked with CDP to launch a new framework for measuring, reporting and reducing environmental impacts.

And, just this week, Small Business Britain has launched a new education programme in partnership with Oxford Brookes University.

The new ‘Small Business Sustainability Basics programme’ is a free, online, six-week short course that will run from March to May 2022. It will help SME decision-makers to understand their role in the net-zero transition and how they can leverage the money-saving and growth opportunities of reducing their environmental impact and innovating products and services.

By Sarah George

Source: Edie

Two in five (40.0 per cent) small and medium-sized businesses in the UK plan to hire, on average, six new employees before the end of March, following a promising start to the year, according to the latest quarterly Barclaycard Payments SME Barometer.

The news comes as 56.2 per cent of SMEs report a rise in earnings in the last quarter of 2021 against the same period in 2020. Data from Barclaycard Payments, which processes £1 in every £3 spent in the UK and services over 350,000 SMEs, supports this trend – with transaction volumes up 42.3 per cent for in the last three months of 2021, compared to the same period in 2020.

2022 has started positively for many SMEs despite concerns around economic uncertainties, with almost three fifths (58.1 per cent) predicting an increase in revenue this quarter compared to the same period last year when the UK was in the third COVID-19 lockdown.

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On average, businesses forecast a year-on-year increase in Q1 turnover by 13.5 per cent. Perhaps unsurprisingly, hospitality and leisure operators – whose physical premises were closed this time last year – expect the largest turnover increase (33.6 per cent), followed by retail (16.5 per cent), transport and distribution (14.6 per cent) and financial services firms (11.2 per cent). This is likely due to the impact of coronavirus settling and SMEs feeling more confident to invest or seek investment – evidenced by 32.7 per cent of UK SMEs who plan a ‘high level’ of investment in their business over the next 12 months.

Year-on-year payments volumes also demonstrate a feeling of confidence amongst SMEs across the UK, with leisure and entertainment, food and drink and retail SMEs seeing an increase by 471.0 per cent, 110.8 per cent and 54.1 per cent respectively.

Overall, there is a quiet confidence among small and medium-sized company leaders, that they are on track to have a positive finish the financial year, despite a broader atmosphere of uncertainty among rising inflation, the cost of living on consumers and the lingering impact of the Omicron variant.

The research, which polled 577 senior staff working in UK SMEs, found that overall business optimism is beginning to build, scoring 55 out of a possible 100, up from a low of just 40 points in Q2 2020. This quarter equals the highest levels recorded (with Q1 2020, Q2 2021 and Q3 2021 recording 55 each), since the Barclaycard Payments SME Barometer started in February 2020, before the first lockdown.

Yet, while almost half (48.7 per cent) are optimistic about the outlook for their firms, confidence in the broader economy is less pronounced, with those reporting a neutral sentiment (39.6 per cent) outweighing those who are optimistic (23.8 per cent).

Just under two thirds of SMEs (64.6 per cent) are worried about a rise in the cost of living and inflation and a similar proportion (66.6 per cent) highlight a feeling of nervousness about increases in their energy bills, with four in ten (39.4 per cent) stating that it will impact their ability to remain competitive, while 9.5 per cent will reconsider the need for a physical retail outlet as a result.

When asked to select the number one challenge for this year, SME leaders now view the rising cost of living as a bigger headwind than the ongoing uncertainty around the pandemic. Over a tenth (10.6 per cent) of the respondents to the Barclaycard Payments study selected a rise in inflation as the issue causing them the greatest concern, this was followed by the stability of the domestic economy (10.2 per cent) and the difficulties associated with COVID-19 (6.6 per cent). In contrast, SME leaders ranked the pandemic (22.0 per cent) as the biggest challenge of 2021, followed by the domestic economy (8.2 per cent) and the cost of materials (7.8 per cent).

As a result of the challenging economic backdrop, SMEs have a mixed view on how this will impact consumer spending throughout the year. While four in 10 (41.7 per cent) SMEs expect it to fall, a further 29.2 per cent believe that, although shoppers will spend cautiously, they are likely to spend more on loved ones to help lift their spirits.

Colin O’Flaherty, Head of Small Business at Barclaycard Payments, said: “Small and medium-sized businesses have had a positive start to the year and it’s encouraging to see so many seeking to add to their workforce. SMEs are also remaining resilient by continuing to focus on areas within their control, such as by improving their operating models to overcome the hangover to supply chain disruption which peaked at the end of last year.

“The coming months will no doubt present continued challenges for British SMEs and the impact of rising costs will remain front of mind. Businesses will need to call on the same spirit for innovation and specialised support that has propelled them through the last two years.”

Jo Fairley, Co-Founder of Green & Blacks and SME Investor said: “The strong start to the year for British small and medium-sized businesses, who are looking forward to an average anticipated uplift of 13.5% in earnings over Q1, is really great news. But it comes at a time where two thirds of SMEs are also acutely aware of the challenges posed by the rising cost of living, inflation and energy bills – potentially a perfect storm.

“From my own experience running multiple ventures, I know all too well that trying to weather economic turbulence while growing a business can be daunting on top of the day-to-day fire-fighting. Nevertheless, the last couple of years have shown that the British consumer is keener than ever before to support smaller and local businesses, and this should prove really positive for SMEs, helping them not just to cope but go grow in the months ahead.”

Earlier this month, Barclays launched a package of support aimed at boosting small businesses, with the bank set to host 50 masterclasses a month this year, which will focus on managing cash flow, business growth and support for wellbeing. The classes are open to all small business owners, with national events focused on the hospitality and care home sectors.

Source: The Manufacturer