Construction SMEs are set grow or maintain investment over the next 12 months, new research from Paragon Bank has found.
A survey of over 1,000 SMEs, conducted by Opinium on behalf of Paragon found that, despite wider economic challenges, 41% of firms in the sector are set to increase investment, with 48% set to maintain current levels.
Investment plans are matched by confidence within the sector for growth, with 50% expecting turnover growth and a further 35% planning on growth to maintain at its current level.
The findings come as part of a national poll into UK SMEs, which found that nearly a quarter of all businesses (23%) expect turnover growth of up to 5%, with 14% forecasting growth of between 5% and 10%. A further 7% expect growth of above 10% during the period.
A similar proportion of companies (48%) said that their business had grown over the previous 12 months despite the economic challenges and issues of the pandemic, with 29% saying turnover had reduced.
The predicted growth for SMEs is mirrored by investment plans, with 42% increasing investment in their businesses and a further 37% maintaining their level of investment – compared with only 20% reducing investment.
When asked how they considered the current position of their business, a third of SMEs (34%) described their business as thriving, with half (51%) stating their business was stable. Just 1% of companies said they were struggling to keep the business afloat, with 14% stating the company was recovering.
While the research highlights predicted turnover growth and increased investment in the year ahead, it also has identified the challenges SMEs are preparing for, citing as potential risks:
- Raising inflation impacting customers (23%)
- Cost increases (20%)
- Supply chain disruptions (11%)
- Impact of Brexit (10%)
- Impact of the pandemic (9%)
- Staffing recruitment and retention (8%)
Commenting on the growth outlook for the construction SME sector Terry Lloyd, Paragon Bank’s Head of Construction Finance, said: “The resilience of the construction SMEs is evident in not only our sector’s expectations for growth, but also in the clear evidence that businesses are set to keep investing. This confidence is greatly encouraging, as construction has a key role in national economic growth. It is also vital that businesses have access to the financing they need to meet their goals, and I delighted that Paragon will continue to support the sector in the year ahead.”
Commenting on the national research findings John Phillipou, Paragon Bank’s Director of SME Lending, said: “SMEs are the backbone of the UK economy and, as this new research demonstrates, even though they are continuing to face a series of challenges they remain resilient and plan to continue growing and investing in the year ahead. Despite uncertainty over fuel and energy costs, SMEs know that they need the equipment and assets to fulfil the workload ahead. This will drive the need for careful financial planning alongside any investment in equipment.
“Their success is fundamental to our country’s growth prospects and it is vital they have access to the financial support and tools necessary to meet the challenges they may encounter.
He continued: “With concerns over supply chains, SMEs may require invoice financing support to ensure they continue to have the necessary cashflow to maintain their operations. Also, through refinancing they can access the equity in their existing assets to help fund their growth objectives.
“Seeking financial support can be a pragmatic, practical solution for successful businesses and, at Paragon, we are keen to do what we can to support businesses in navigating the years ahead.”
