Midlands SMEs are ready to ramp-up investment, with fresh spending on assets, Paragon Bank research has found.
Published alongside An SME Led Recovery, a survey of SMEs from across the UK identified growing expectations for cashflow to improve – leading to increased investment by businesses in their operations.
The first in a series of quarterly research reports that will track the sector, An SME Led Recovery details the performance, plans and ambitions of SMEs, highlighting the central role they play in the regional economy. As part of the research, specific data on the Midlands was collected – providing insight into the position of SMEs across the region.
Cashflow and turnover set to improve
Conducted for Paragon by Opinium, the research found that 60% of Midlands SMEs predict that their cashflow will improve over the next three months and 58% are expecting an increase over the next year. Only 36% had seen their cashflow increase over the previous three months.
Similarly, turnover is also set to improve – 55% of Midlands businesses reported increased turnover during the first quarter of the year, with 44% expecting turnover to further improve during the second quarter compared to 24% that forecast a fall.
Investment on the increase
Over a third of Midlands SMEs (41%) will use the increased cashflow to increase investment in their businesses, with 49% planning to maintain current investment levels and only 6% expected to reduce spending.
Equipment and machinery lead the planned investment of SMEs, with 46% and 39% of all SMEs in the region planning to invest in each respectively.
The renewed investment will also see 23% of Midlands SMEs investing in electric vehicles over the next six months – higher than the proportion set to in invest in traditional fuel vehicles, alongside a small reduction in those firms investing in HGVs.
Confidence strong in business prospects
Midlands SMEs have expressed confidence in the prospects for their own businesses and the sector in which they operate but were less confident about the macro environment. Over half said they were confident in their own business (64%) and their sector (55%) in the next three months – compared to only 28% who expressed confidence in the wider UK economy.
SMEs seek finance
The research also found that 44% of Midlands SMEs sought additional financing over the last three months, with 56% of those businesses seeking over £100,000.
While 5% of this group received no additional financing, 24% received all the financing they sought and a further 15% secured a partial amount.
Commenting on the research findings for the Midlands, Peter Pike, Paragon’s regional director for the region, said: “With plans for increased investment and expectations for improved turnover and cashflow, Midlands SMEs are ready to deliver economic growth in the region and beyond. As our new research shows, they are confident and seeking investment – and after the challenges that have faced over recent years, this is a clear indication of the strength of our SME sector.”
