Seasonal businesses drive summer bounce in small business growth forecasts

This summer sees a two-year high for the proportion of seasonal businesses predicting growth for the quarter ahead. New tracking data from Novuna Business Finance reveals that 40% of small businesses that have a seasonal business model predict growth for this summer - a 25% rise on the start of the year and a favourable position compared to non-seasonal businesses, where growth forecasts have fallen for the fourth consecutive quarter.

Percentage of small businesses predicting growth each quarter

The findings are from Novuna Business Finance’s Business Barometer study, which has tracked small business growth forecasts every quarter for the last nine years. Whilst the national picture remains unchanged on previous quarters - with the percentage of small businesses predicting growth holding firm at 31% - the representative survey of 1,103 small business owners revealed significant divergence by sector, age and region.

Age of businesses: Young enterprises drive growth

In addition to seasonal businesses enjoying a summer bounce this summer, the research also revealed that younger businesses were significantly more likely to be predicting growth for the three-months to September. For small businesses that had been trading for less than five years, 51% predicted growth over the summer, a sharp rise on 42% last quarter and the highest figure on record since the Novuna tracking study began. In contrast, older enterprises (trading for more than 20 years) saw the percentage predicting growth fall to a two-year low of 24% [see table in notes to editors].

Sector analysis: Contrasting fortunes with highs and lows

Aligning to the positive findings for seasonal businesses, the latest data for small businesses in the agriculture and hospitality sectors showed signs of much needed stability after a torrid time through the lockdown era. In agriculture, for the third consecutive quarter more than 30% of business owners predicted growth (31% for the current quarter) - a significant rise on the previous two years where the percentage of enterprises predicting growth ranged between 11-22% [see table in notes to editors].

In the hospitality sector, growth forecasts have also improved – up from 24% to 36% over the last six months. In the transport and distribution sector, growth forecasts hit an 18-month high at 35%.

Set against this, growth forecasts in the retail sector hit a 12-month low, falling to 27% and the percentage of small businesses predicting growth in both manufacturing and IT/telecoms hit a two-year low (32% and 35% respectively).

In the construction sector, growth predictions remained volatile quarter by quarter. For the current period, the percentage of small business owners predicting growth fell sharply on Q2 (from 31% to 24%), although this figure remains higher than was the position at the start of the year.

Regional analysis: Mixed picture around the UK

A regional analysis of small business growth predictions also presented a mixed picture. Whilst quarterly growth predictions show signs of stability and consistency in London, the South East and Wales, the latest Novuna data shows big swings elsewhere. For example, in Scotland, the North East and West Midlands there is a 12-month high for the percentage of small business owners predicting growth. In contrast, in the North West and East Midlands, small business growth predictions have hit a 12-month low point [see table in notes to editors].