Most UK-Based SMEs Are Content With Their Current Size

British small and medium-sized enterprises (SMEs) are reluctant to grow too quickly, a new report has suggested.

The Your Business Outlook 2014 published by accountancy firm Baker Tilly found that many companies are happy with their current size and are concerned about the risks involved when it comes to expanding.

UK business secretary Vince Cable has encouraged British SMEs to make up for the five years that were lost during the economic recession and the government has launched a number of initiatives aimed at helping small firms to flourish.

However, 96 per cent of the 750 organisations that took part in the Baker Tilly survey said they are content with what they have and are in no rush to fast-track their expansion plans, the Daily Telegraph reports.

Around 84 per cent of respondents revealed they are reluctant to take on more debt, even though some banks are starting to offer more favourable terms on small business loans. Only 23 per cent indicated they would be willing to explore alternative forms of funding in order to grow.

Neil Sevitt - partner at Baker Tilly - told the news provider that the findings are worrying.

"It is a real concern that, if SMEs do not take a long-term view and ignore opportunities for investment and expansion, economic recovery will remain hesitant and uneven. Businesses need to take more courageous and strategic decisions," he was quoted as saying.

Mr Sevitt added that more focus needs to be placed on research and development (R&D) in the UK and SMEs should also explore different markets.

This is something the government is keen to encourage, as it launched 'Export Week' yesterday (November 11th) - an initiative aimed at increasing the number of businesses selling products and services overseas from one in five to one-quarter.

The Baker Tilly survey showed that just 16 per cent of SMEs are planning to invest more money into R&D in the next 12 months, while a mere 18 per cent are looking to recruit new staff over the same period.

Expert Opinion

It’s disappointing to hear that the SME business owner in this survey are concerned about expanding their businesses. <br/> <br/>“We know how important their growth is to the overall success and long-term sustainability of the UK economy and it is vital that they receive the necessary encouragement to make the step forward and expand. <br/> <br/>“This is one of the reasons why we are getting behind the Government’s Export Week initiative. The aim here is to increase the number of businesses that are trading overseas and we believed that SMEs with the right advice, can take a lead on this.” <br/> Fergal Dowling - Partner