Special Feature
Ahead of the game SMEs planning to invest as they emerge from lockdown Michael Hartig Managing Director – Head of Specialist Teams Barclays
W
ith the economy getting back into its stride as the UK emerges from lockdown restrictions, the appetite for investment among SMEs is on the up, according to the latest research from Barclaycard Payments. The Barclaycard Payments SME Barometer survey revealed SMEs predicted a 9.8% rise in revenue in Q2 2021 compared to Q1 of this year, with hospitality and leisure sector businesses anticipating an even stronger 21% jump. Buoyed by this renewed confidence, 85% of SMEs say they plan to invest over the next 12 months, mostly in recruiting staff, new equipment or technology, and ramping up their marketing.
Positive signs This apparent enthusiasm to invest is an incredibly positive business sentiment message and one that suggests the broker community should be anticipating an increasingly busy period of engagement with their clients on how to take advantage of the anticipated economic growth. The degree of pent-up demand for investment will, of course, vary by sector and the extent to which each business has been impacted by the pandemic. While many have been able to ‘pivot’ their business models and keep going, others have been in partial or total hibernation. How businesses have coped during lockdown is likely to be key to their financing landscape as they look to the future. Has the business furloughed staff, has it benefited from business rate relief or government-backed loans, and has it budgeted to make any repayments further down the road, for example? Businesses typically need more working capital as they come out of a downturn, so a detailed understanding of a client’s current 28 | NACFB
and projected working capital position should also be high on the priority list.
Changing plans The fundamental shifts brought about by the pandemic may also mean significant changes in a client’s business model, customer base or ways of working that could require investment in anything from more delivery vehicles to a better IT infrastructure to support online sales or more employees working remotely. There’s no doubt lockdown has presented huge opportunities for innovation, but what level of investment will be required to allow businesses to remain competitive in terms of productivity and customer service expectations in the ‘new normal’ environment? I would always urge brokers to have these investment conversations with their clients early. Securing funding is invariably easier if it’s planned for six months down the line, rather than emergency financing at 48 hours’ notice.
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This apparent enthusiasm to invest is an incredibly positive business sentiment message and one that suggests the broker community should be anticipating an increasingly busy period
Research was conducted online by YouGov on behalf of Barclaycard Payments between 14th April – 4th May 2021. YouGov polled 678 senior members of staff working in UK SMEs, weighted by region to reflect SME distribution in the UK.