Throughout 2018 the threat of economic uncertainty across the UK was a constant presence, with the March 2019 Brexit deadline drawing ever closer. Beyond the UK leaving the EU, SMEs also faced wide ranging obstacles such as the ongoing shortage of mid-level skilled workers, as well as regulatory changes, including the launch of GDPR.
Despite such a volatile trading environment the message throughout 2018 has been that SMEs are defying expectations, demonstrating confidence and pursuing growth. This was reflected in the UK Collaborate 2018 survey, with 51% of SMEs reporting higher levels of confidence compared to 2016. Data also showed SMEs continued to put growth high on the agenda during 2018.
Ambitious growth plans were certainly a common denominator across the businesses FDC backed during 2018, with a broad spectrum of strategies including build-and-buy plans, acquisitions and management buyouts featuring in our portfolio. An increase in growth focused businesses was also evident in the general feeling of buoyancy and activity across the dealmaking community.
Digital transformation was a growth-booster during 2018, with UK SMEs investing in cybersecurity and cloud technology. We saw some of our investee businesses using development capital to consolidate and upgrade IT systems, improving efficiency, as well as reaching new and existing customers.
So, whilst Brexit has created economic uncertainty, for some businesses it has also acted as a catalyst for strategising, preparing for the challenges ahead, and seeking out new growth opportunities. Its agile businesses, with innovative, entrepreneurial leaders, that are emitting positivity and defying the disconcerting messages we’re hearing from both the media and government. It is these businesses that need access to flexible investment options to execute their plans.
However, despite an increase in SME confidence, access to funding remained a barrier for SME growth throughout 2018, with over half of SMEs reporting that they could not access all the funding they required. Therefore, it’s more important than ever before that alternative finance providers are poised to work with businesses, advisors and traditional lenders to ensure growth plans can be supported during the inevitably turbulent times ahead.