Proportion of small businesses considering new growth initiatives rises to 68% as confidence returns

• Six-month high for the percentage of manufacturing (81%) and construction (75%) small businesses considering new initiatives to drive growth
• Four-year high for small businesses in IT & Telecoms
• Proportion considering an investment in new equipment reaches 4-year high (23%)
• Push to hire staff strongest in Yorkshire and the Humber

New research hints at renewed small business confidence since the installation of the new Government. The Novuna Business Finance study of 1,000 small business owners and senior management reveals that the proportion of enterprises considering new projects to secure future growth has risen to 68%, after a dip to 66% at the start of the year.

These findings come at a time when 35% of UK small businesses have reported growth for the next three-month period to 30^th September - a rise from 30% for the previous quarter. This resurgence of small business confidence is comparable to the start of 2022 – and, in addition to this, the new data suggests a far greater number of enterprises and now considering investing in new initiatives that will deliver a further uptick in growth going into the final quarter of the year.

The tracking study asked a representative sample of small-businesses which initiatives they were considering for the months ahead to help them fulfil their potential and achieve business growth.

The increase was partly fuelled by substantial upticks in specific sectors, with the proportion of small businesses considering specific growth initiatives reaching a four-year high in the IT and telecoms (77%) sector. The manufacturing sector stood out with the highest proportion of businesses considering new growth projects over the next three months (81%), up 6% since Q1 this year and broadly aligning with the sector's position for the last five years. Other significant sectors included: construction (75% - a six-month high); media and marketing (75% - an 18-month high) and transport and distribution (69% - a six-month high).

Specific plans to achieve growth

• Still reeling from the effects of the cost of living crisis and economic uncertainty, small business leaders are prioritising cost control as a vehicle to secure for future growth. Keeping fixed costs down remained the top priority for 52% of respondents (a modest decline from 56% at the start of the year), followed by improving cash flow (33%) and enforcing stricter policies on late payments (24%). Additionally, reducing headcount was an important focus for 21% of respondents.
• The proportion of small businesses planning to invest in new equipment reached a four-year high, at 23%. This trend was especially prominent in the manufacturing and construction sectors, both at 27%.
• There was also an increase in the proportion of small businesses looking to hire more people (22%, up from 20% at the start of the year). Hiring was strongest in Yorkshire and the Humber (26%), surpassing London (25%) and the East of England (25%). The finance and accounting (36%), legal (39%), and IT and telecom sectors (33%) led this drive.
• Meanwhile, the proportion of businesses looking to expand into new and overseas markets rose to 22% – a two-and-a-half-year high. This was particularly notable in the manufacturing sector (28%), significantly expanding businesses (43%), and those with high turnover (33% for businesses with a turnover of £10 million or more).