In the past six months there has been a significant rise in the number of small business owners saying that market uncertainty is hampering their growth plans.
A new study from Hitachi Capital Business Finance has found that 39% of SMEs now say their businesses are not reaching their potential because of market uncertainty - up 26% since Q2 2019.
The problem is most acute in finance and accounting (48%) and manufacturing (45%). In addition, 31% of businesses in the agricultural sector say that uncertainty is preventing them from growing - a rise of 48% in six months. Other key sectors that say the same are media and marketing (44%), IT and telecoms (39%), hospitality (38%), law (35%) and construction (33%),
Hitachi Capital's Business Barometer asked more than 1,200 small business owners which external factors were holding their business back. It found that 75% of small businesses were being held back by factors that were outside of their control, with market uncertainty affecting three in five. A growing number also cited the falling value of the pound as a big concern in the months ahead, rising from 8% in May to 13% in October.
Other key barriers to growth are:
- Uncertainty as to the future of the business (17% in May to 20% in October);
- Volatile cash flow (13% in May to 14% October);
- Unpredictable/bad weather (6% in May to 7% October);
- Old or out-of-date equipment (5% in May to 6% in October).
The research also suggests that young and long-established businesses are equally worried about protracted market uncertainty. For enterprises that have been trading for five to ten years, concerns have risen from 29% to 42%; for those that have been trading for 35 years or more market uncertainty fears rose from 29% in May to 48% in October.
Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance said: "With the upcoming general election, it seems highly unlikely that there will be a clear position on government policy or Brexit until after the Christmas break. For many small businesses this will mean planning for a New Year with lots of unknowns as market factors. This could play out with us seeing a dip in business confidence at the start of 2020 although, longer term, when the sector has greater certainty to plan against we envisage small businesses will be the first to see change as an opportunity to grow and diversify."
"One of the remarkable findings from our research over the last year is that, overall, there has been little change in the perceived barriers that small businesses feel they have to overcome to grow their business. Despite a period of unprecedented market volatility and political uncertainty, there has been no significant rise in the proportion of businesses citing red tape, cash flow or access to labour as bigger issues than they were a year ago."
Written by Rachel Miller.