The impact of rising costs is doing little to dampen the growth aspirations of small and medium-sized businesses in Yorkshire, according to new research by Yorkshire Bank.
The new survey by the Bank, conducted among 750 SME decision makers, reveals that while small and medium-sized businesses are experiencing rising costs, the majority are rolling out expansion plans as faith in the UK economy grows.
Nearly three-quarters (69 per cent) of Yorkshire SMEs said their costs had risen in the last 12 months, with raw materials, staff salaries and utility and energy costs creating the most concern. The perception of rising costs is most notable in the manufacturing, food and drink, hospitality and legal sectors.
This perception could be more acutely felt following the Chancellor’s Budget in July when he announced the introduction of a living wage – an increase in the national minimum wage for workers over 25. This increase, from £6.80 an hour to £7.20 an hour, will come in to force in April next year. By 2020 this will rise to £9 an hour.
However, despite the challenges faced by smaller businesses as a result of increased costs, More than three-quarters (77%) are expecting to invest in their business in the coming year, with new equipment, premises and staff being top of the priority list.
More than one in three (34 per cent) believe their business’ turnover will grow by an average of 10 per cent in the year ahead. Around half (54 per cent) believe it will stay the same while one in ten (10 per cent) feel sales will dip.
This investment is being driven by confidence in the UK as a good place to do business. A quarter (26 per cent) of businesses feel the Yorkshire economy is in a better position today than before the recession, a belief which is potentially acting as a buffer to the rising costs.
Simon Wright, regional director for Business and Private Banking at Yorkshire Bank in Yorkshire, said many businesses had used the experience of the recession to reduce the impact of rising costs.
He said: “Despite rising costs, Yorkshire’s small and medium-sized businesses are demonstrating they have the financial flexibility to weather leaner periods and now have the appetite to grow.
“We’ve spoken to hundreds of small businesses up and down the country and found many are working hard to protect themselves from these rising costs, but also extremely confident about the current state and future direction of our economy.
“Through our bespoke lending initiatives we’re providing the flexibility they’re looking for to enable them to invest and expand where they see opportunities, whether that’s to create more jobs, purchase premises or enter new markets.
“As a result, we are seeing small businesses innovating, creating new jobs and laying down foundations for the future.”
Earlier this year Yorkshire Bank became the first to partner with the British Business Bank on its ENABLE Guarantee programme. Up to £125m of new lending by Yorkshire Bank, will help more small businesses achieve their growth ambitions.