SME optimism rises for the third year in a row

Optimism among UK SMEs has grown for a third consecutive year, according to a poll by American Express.

The survey saw found that seven in ten SMEs say they feel confident about the future of their company, up from 67% in 2023 and 65% in 2022. 

The poll also found that almost three quarters say their business is in good shape, marking a 5% increase from 2022. Among firms with between one and nine employees, 67% feel confident compared to 62% in 2023. 

The most significant uptick in optimism was among micro enterprises (those with between 1-9 employees), with 67% feeling confident this year, compared to 62% in 2023. Sole traders are also feeling more upbeat than this time last year too (52%), an increase of 3 percentage points on confidence levels compared to 2023 (49%).

The findings of the annual Barometer survey of decision makers at 1,000 UK micro, small and medium sized businesses and sole traders, conducted in partnership with Small Business Saturday UK, reveal that almost three-quarters (71%) of SME leaders feel their business is currently in good shape, an uplift of 5 percentage points since 2022.

This rise in optimism is fueling a growth mindset, as over half (52%) of respondents are planning to invest more over the next 12 months to grow their business. Business leaders are also committed to bolstering their customer offer, with 54% looking to improve communication with customers, 42% providing additional services and 33% planning to launch more special offers.

At the same time, SME businesses believe their customers are now less focused on price when deciding what to spend on; in 2023 57% of respondents felt customers were driven by price above all else, compared to 51% this year.

There are also encouraging signs when looking ahead to the remainder of the year; almost three-fifths of respondents (57%) believe sales will be better in Q4 2024 when compared to the same period across the previous two years. 

Amanda Salt, Vice President, Small & Medium Enterprises, UK Card Services at American Express, said “It’s incredibly positive that more SME businesses are feeling confident about the future. While it remains a challenging landscape, business owners continue to show remarkable resilience as they focus on growth and delivering for their customers. At American Express our focus will always be on backing these businesses, helping them go from strength to strength with a tailored suite of products designed to meet their needs.”