Backing Business Ambition
There’s no denying how challenging the last year has been but the UK’s privately owned businesses are in buoyant form according to the ‘Backing Business Ambition’ survey from KPMG Private Enterprise and the regional Business Insider magazine series.
Given COVID-19 induced economic paralysis, it is remarkable and inspiring that nearly one in three businesses report an increase in revenues in the last year. Meanwhile, of those that have suffered a revenue drop, half expect their income to revert to pre COVID-19 levels by the end of this year and less than 5% do not anticipate their revenue recovering.
Looking to recruit
There’s encouraging news for the jobs market with five times more business leaders intending to increase their workforce in the next year than those who foresee decreasing it. This, and the fact the top investment priority is funding domestic growth, may indicate planning for the wave of consumer spending predicted for later in the year, as those fortunate enough to have built up savings during the months of inactivity, look to unleash their pent up demand, particularly with retailers and hospitality.
Working through the challenges ahead
Of course, COVID-19 remains a serious threat to business growth, named by over a third as their biggest challenge. While the vaccine rollout is a game changer for confidence levels, those in business are clearly still operating in a time of uncertainty. This is doubtlessly behind the fact our survey found the next most concerning challenge is the fear of weaker domestic demand - cited by 16% of people. So, consumer facing businesses around the country should ideally be positioning themselves to profit from high spending, while simultaneously protecting their cashflow should the route out of lockdown be less then straightforward. Not an easy balancing act, but continuing to focus on prudent cash and working capital forecasts for differing scenarios will be critical.
A striking statistic relates to digital transformation. This was the second most cited investment priority for the next year, by more than four in ten. When asked why, almost 70% said they wanted to harness digital to improve productivity. This suggests the vast majority of businesses expect changed behaviours and operational models, implemented in many cases in response to social restrictions, are embedded for the long term and bodes well for securing a welcome boost to the performance of the country’s SMEs, whose competitiveness and future success increasingly depends on their embracing of digital technology as being at the heart of their business, virtually regardless of sector.