Small businesses are optimistic about the coming year, with half expecting to see profit growth of 16 per cent or more, finds an SME survey.

Small businesses are optimistic about the coming year, with half expecting to see profit growth of 16 per cent or more, finds an SME survey.

According to the latest research from UK private equity firm ECI Partners of 246 companies, 79 per cent of CEOs expect to see turnover growth of more than 6 per cent over the next year.

Some 60 per cent forecast double-digit turnover growth with nearly a third predicting growth of more than 20 per cent.

Prospects for job creation are equally strong, as 74 per cent of CEOs expect to add to their firm’s head count, and half forecast growth in employee numbers of more than 6 per cent.
 
Mark Prisk, minister of state for Business and Enterprise says, ‘It’s good news that despite a tough few months, nearly three quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period.

Up and down the country, it is Britain’s SMEs that are driving our economic recovery.’

However, access to external financing remains difficult for many respondents, with 60 per cent of CEOs saying it would be ‘difficult’ or ‘very difficult’.

Where external finance is sought to fund growth initiatives, bank debt or private equity are considered the most likely alternative routes with the public markets falling further as a likely source of capital.

Private equity remains a relatively likely source of capital for around 40 per cent of companies.

In relation to interest rates, more than a third of companies believe that future rises would not be a concern.

However for the majority, a rise in rates to 3 per cent or more is the point at which their companies would be impacted, citing a dampening of demand, less disposable household income, future wage pressures and curtailing the ability to borrow.

See also: Angel reveals SME interests

Related topics: Profit, SME optimism, Turnover