October 9, 2023
More than half of all business leaders (55 percent) believe that the overall economic conditions in the UK and Ireland have worsened compared to a year ago. Yet, 58 percent of SMEs anticipate an increase in their firm’s sales revenues over the next 12 months; while nearly half (47 percent) expect profitability to improve within a year and 47 percent of SMEs are confident that their firm’s total number of employees will grow in the next 12 months. Business leaders are planning to invest more in AI and acquisitions to help them navigate an uncertain future.
Despite the belief that revenue and headcount would increase, overall business confidence has declined to 94.7 points, down 6 points from the last quarter, indicating that economic concerns persist among most UKI SMEs. This significant drop in confidence can largely be attributed to pessimism towards the current economic conditions in the region, according to the report.
The survey found that only 8 percent of CEOs believe that a ‘soft landing’ has already occurred and just over a quarter (27 percent) anticipate that a soft landing will occur in the next 12 months. Around half (54 percent) believe that the economy is currently in, or approaching, another recession.
The report suggests that even though business leaders are experiencing significantly more financial challenges than in the last quarter, SMEs seem to retain an overall positive outlook on future growth within their respective industries. The study found that more than half (58 percent) of British and Irish SMEs still expect to boost sale revenue for the coming year.
As businesses continue to navigate the financial pressures of a volatile economy, leaders have had to continually adapt strategic plans. The report found that 79 percent of CEOs are currently relying on internally developed processes and resources as their main approach to strategic planning.
Business leaders are specifically embracing and investing in the rapid development of Artificial Intelligence (AI). In fact, 30 percent of respondents intended to reallocate budgets allowing for new tools that help incorporate AI capabilities within core business operations, while a further 26 percent are planning on increasing budgets to work with new vendors in the AI space.
Most business leaders (77 percent) also say they are planning strategic acquisitions within the next two years. Additionally, more than half (58 percent) of UK and Ireland SME leaders are considering selling their businesses within a two-to-five-year timeframe. A further 54 percent are considering exiting their business within the same period. ?