Small business confidence soars

UK business owners forecast average annual growth of 33% over the next five years – the highest number in the SantanderBusiness Growth annual survey since it began in 2011.

A fifth of business owners say their business has never been in better shape, compared to 13% in 2013, and 17% of businesses are looking at acquisitions for growth in the near future.

“It’s extremely encouraging for UK plc that business confidence in the UK is at its highest level for three years, with businesses focused on growth both at home and overseas,” said Marcelino Castrillo, Managing Director of SME Banking at Santander.

“While business owners report that trading conditions remain challenging, a fifth believe that their business has never been in better shape. The outlook for staff retention and new job creation is also positive, which is welcome news for the wider UK economy.”

He added:

“Santander is committed to helping businesses prosper and has been a consistent supporter of businesses in the UK, with lending over the last four years growing by an average of 17% per year.

“Our innovative Breakthrough programme is designed to support the UK’s best fast-growing small businesses and our International proposition supports UK companies by providing them with access to a worldwide network with proven expertise in international finance.”

The latest Business Growth annual survey by Santander Corporate & Commercial found that businesses with an annual turnover of up to £20m are predicting turnover growth of 33% a year on average – the highest such number since the survey began three years ago.

The figures were matched by a strong outlook for employment, with just under a third (30%) of companies stating that retaining existing staff was an ‘immediate priority’ – up from 19% in 2013 – and ranked now as the second most important priority after ensuring the survival of their business (57%). One in eight (12%) respondents said they were focused on hiring new staff.

Despite the strong optimism and business confidence, business owners still report facing challenges.

A tough trading environment was still seen as the biggest challenge to growth by UK businesses, cited by 47% of respondents (compared to 46% in 2013). A fifth (22%) said that reducing costs was a priority, although this is down significantly from 33% in 2013.

Access to capital was also seen as a challenge by a quarter (25%, versus 26% in 2013), while 18% of businesses said their ability to hire and retain the right staff was a concern, up from 14% in 2013. Santander has extended £5.8bn of new facilities to UK SMEs and corporates in the first nine months of 2014.