As ever at this time of year, businesses are considering what the future holds for them in the coming year.
Save some outspoken Brexiteers, most “pundits” suggest the signs are not good.
The Chartered Management Institute (CMI) surveyed 1,000 managers across private, public and charitable sectors and found that optimism had steadily reduced from 63% in 2014 to 57% today with approaching one in four saying they were pessimistic about the coming 12 months. This at least is in positive territory but most such surveys reveal an optimistic bias.
The Institute of Chartered Accountants for England and Wales (ICAEW) based its predictions on the economy’s performance from October to December 2017. On this basis, the organisation predicts GDP growth rising from 1.5% to 1.6% in 2018, with the weaker £Sterling post Brexit referendum continuing to help exporters.
However, the ICAEW warns that investment will remain weak amid the continuing uncertainty about the outcome of the Brexit negotiations, with the prospect of there being no deal adding to uncertainty and business risks.
The Confederation of British Industry (CBI) has also focused on Brexit uncertainty, calling for greater clarity, especially over the transition period, by the end of the first quarter of 2018.
CBI Director General Carolyn Fairbairn also said transforming the UK’s skills base and its infrastructure should be the highest priority for the coming year, particularly as the country continues to lose overseas workers and to attract fewer while the Brexit uncertainty remains.
So, what prospects does 2018 hold for SMEs?
It should be said that prediction is notoriously difficult because it cannot allow for the unexpected, which may be positive rather than negative.
This is why the Office for National Statistics (ONS) regularly revises its quarterly figures for some time even after a period has ended and it can be some time before the actual figures are revealed.
It is also the case that even in the most difficult of times, there will be opportunities as well as drawbacks. Especially for SMEs who are less exposed to macroeconomics than to entrepreneurial zeal.
SMEs are able to be more agile in responding to a potential or unexpected opportunity in a way that larger organisations cannot because the latter’s systems and hierarchies tend to be less flexible. This gives SMEs an edge in an uncertain and rapidly changing world.
I would argue that if an SME has robust monitoring systems in place for regularly reviewing its performance and revising both marketing and business plans in the light of new information, as suggested in my last blog on January 2, it is better placed to take advantage of opportunities as they develop.
So while the overall picture might appear bleak, SMEs can become the real powerhouse of the UK economy. They need to quickly and constantly weed out any parts of their operation that become a drag on the business and maintain tight control over cash flow, but now is a time to invest in the future, in both people and equipment to increase sales and improve quality and productivity
Clients and their business are out there, it is simply a matter of getting them to buy from you. Despite the pundits, the prospects for agile SMEs are good.