Small business growth forecast hits 18-month high

Two in five small business leaders (39%) predict growth by 31st March – the highest level for 18 months, according to new research from Hitachi Capital Business Finance. By industry sector, this quarter sees a rise in growth outlook registered across the board in all but two sectors, with a significant upturn of growth projections in real estate (49%), IT and telecoms (49%), legal (47%) and media (46%).

In recent weeks, there has been widespread speculation on the likely impact of Brexit on the UK business community. The new data suggests smaller businesses are more likely to see uncertainty as an opportunity. Seasonal businesses, those that live with change and the need to adapt on a regular basis, are more likely to predict growth for the months ahead (40%). Also, small firms that invest in their technology assets are more likely to foresee opportunities to adapt and grow (47%).

Regionally, small businesses in the East (43%) join London (47%) and the North West (45%) as having the most businesses with a positive outlook for the months ahead. Over the last 12-months, there has been a significant upturn in growth predictions in London (rising from 36% to 47%), the South West (from 29% to 38%) East (28% to 43%). In contrast, small enterprises in Wales and Scotland were the least likely to predict growth.

Interestingly, older businesses (those that have been trading the longest) demonstrate the biggest surge in growth outlook, suggesting a willingness to adapt to change. The ‘confidence gap’ between younger and mature businesses shows clear signs of closing.

Percentage of businesses predicting growth to 31 March by age of business (how many years it has been trading)

	Less than 5 years	5-10 years	10-20 years	20-35 years	35+ years
Q1 2020	45%	36%	38%	34%	37%
Q4 2019	45%	38%	34%	24%	26%
Q1 2019	49%	34%	33%	30%	30%

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance said “As the UK economy enters a new chapter, the latest findings from our quarterly tracking research suggest that UK small businesses are starting a new year, a new decade and a new economic era with a positive outlook. What is heartening is the diversity of this confidence, which spans regions, sectors and older businesses modernising.”

“At Hitachi Capital Business Finance we are producing a new series of training and support guides to help small business manage their enterprises through the Brexit transition period. In addition, our smart funding solutions give small businesses greater flexibility in the way they manage their cashflow and help their enterprises through seasonal highs and lows. The UK economy is going through a period of uncertainty – at Hitachi Capital Business Finance we are helping small businesses to live with uncertainty and to see it as an opportunity to innovate and grow.”

Percentage of businesses predicting growth to 31 March by sector

	Q1 2020 Net %that predict growth	Q4 2019 Net %that predict growth	Q3 2019 Net %that predict growth	Q2 2019 Net %that predict growth
Finance & accounting	49%	47%	48%	33%
Real estate	49%	43%	32%	45%
Retail	31%	39%	34%	40%
Manufacturing	44%	39%	30%	38%
Media & marketing	46%	38%	37%	36%
Hospitality & leisure	33%	37%	27%	29%
IT & telecoms	49%	36%	41%	38%
Construction	33%	32%	26%	31%
Legal	47%	30%	44%	41%
Transport & distribution	34%	29%	27%	25%
Agriculture	29%	25%	32%	27%

Net percentage of businesses predicting growth – results over time

	% that predict net growth (significant or modest/organic)
Q3 2018	36%
Q4 2018	36%
Q1 2019	36%
Q2 2019	34%
Q3 2019	35%
Q4 2019	36%
Q1 2020	39%

Percentage of businesses predicting growth by region

	Q1 2020 %that predict growth	Q1 2019 %that predict growth
London	47%	36%
North West	45%	44%
North East	44%	51%
East	43%	28%
Yorkshire /Humber	39%	35%
South West	38%	29%
East Midlands	38%	42%
West Midlands	34%	35%
South East	34%	40%
Wales	30%	30%
Scotland	30%	31%