64% SMEs expect growth in the next 12 months, survey finds

Small to medium-sized enterprise (SME) owners are more confident about business growth thanks to a stabilising economy, according to RSM Bird Cameron’s thinkBIG 2014 study.

While 46% of owners also reported revenue growth in the last 12 months, 34% reported no change and 20% reported a decline. 64% of business owners anticipate growth in the next 12 months.

“Increased revenue growth may be a result of the market entering a period of recovery. The economy’s increasing stability inspires confidence in SME owners, and this is reflected in the upward trend of revenue growth,” said Andrew Graham, national head of business solutions, RSM Bird Cameron.

Another possible hallmark of increased activity and recovery in the marketplace is the potential for interest rates to remain constant or increase. 94% of business owners agree, according to the study.

Andrew Graham said, “This is a double-edged sword. At a micro level, among those expecting an increase, it is widely anticipated (by 77% of SMEs), that increasing interest rates will negatively impact the business.

“This could be a result of interest rates having a direct effect on cash flow. Last year, significantly fewer SME owners indicated that their business would be negatively impacted by increasing interest rates.

“Given the economic downturn of recent years, businesses have been focused on consolidation and survival rather than growth. As a result, those businesses which have been profitable have worked to pay down their debt - in turn reducing the potential impact of interest rate rises. Currently, there are signs of increasing activity in the market, and the economy is showing signs of recovery. This encourages SMEs to start shifting their focus and resources towards growing their business.

“Businesses that have not taken the opportunity in recent years to reduce debt levels will be more vulnerable to the impact of potential interest rate rises.”