Hopes and fears for 2018

Money Posted 03/01/18
Rising inflation and cybercrime are the biggest SME fears for 2018.

Rising inflation and cybersecurity are the most common fears among British SMEs for 2018, according to new research from Barclays Business Banking. SMEs believe these issues are most likely to negatively impact their growth in 2018, while consumer demand is most widely expected to have a positive impact.

Inflation, cyberattacks, and state of the UK economy more widely feared than Brexit

According to Barclays’ annual SME Hopes and Fears Index1, which asks decision makers at UK SMEs which factors they expect to help or hinder their business growth in 2018, inflation is most cited as a fear (by 43%). It can increase costs for a business, and also impact the wider economy, with 36% fearing the effects of prices rising faster than wages, which could put pressure on consumers.

Inflation is followed by the risk of cyberattacks (41%) and the state of the UK economy (40%). These factors are followed by fraudsters targeting small businesses (39%), and Brexit and UK politics (35% each), which rank sixth.

Top 5 SME fears for 2018:

Factors SMEs expect to hinder business growth in 2018 Ranking
Inflation 1 (43%)
Cyberattacks 2 (41%)
State of the UK economy 3 (40%)
Fraudsters targeting my business 4 (39%)
Price inflation outpacing wage rises 5 (36%)

In May 2017, Barclays launched a major engagement campaign, Barclays DigiSafe, to raise awareness of cyberattacks, fraud and scams. It includes a £10m national advertising campaign, and provides customers with additional tools to protect themselves. Dedicated support for the bank’s one million SME clients has included free support clinics.

SMEs have high hopes for consumer demand and are more positive about technology

When it comes to the factors business owners expect to positively impact their business growth, consumer demand is most widely tipped to have a positive impact, with 50% expecting it to do so. This is a change from last year’s results2 when just 22% expected it to have a positive impact.

SMEs have become more positive about technology, with 48% expecting that availability of better technology will have a positive impact on their business (37% last year), and 42% expecting e-commerce/digital presence to do so (23% last year).

Top 5 SME hopes for 2018:

Factors SMEs believe will have a positive impact on business growth in 2018 Ranking
Consumer demand 1 (50%)
Availability of better technology 2 (48%)
E-commerce/ digital presence 3 (42%)
Investment in the local area 4 (34%)
International marketing opportunities 5 (28%)

Reflecting the uncertain times, there is a near even split among SMEs about the outlook for 2018, with 46% believing it will be a year of opportunities, and 49% predicting a year of challenges.

Most SMEs plan to maintain the same level of investment (65%) and employee numbers (68%) as for 2017. However, those making changes are generally positive, with 21% planning to increase the number of employees, compared with 5% planning a decrease, and 20% planning an increase in investment, compared with 8% planning a decrease.

Martin Bonner, head of SME for Barclays Business Banking in Kent said: “The research reflects small businesses being empowered by new technology and e-commerce. Compared with a year ago, more think these developments will have a positive impact on their business. From our work with small companies, we see them making more use of data and online services, including our own, that help them manage their marketing and finances more easily and effectively. By making the most of these opportunities, SMEs can increase sales, cut costs and save time, strengthening their business.

“Inflation is clearly a worry, and in particular the potential for prices to rise faster than wages. Business owners are clearly taking a prudent and cautious approach to the year ahead. However, there are positive signs of SMEs investing more and hiring more staff.”

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