Stronger-than-expected Q2 performance leads to boost in SME optimism

Barclaycard Payments’ quarterly SME Barometer reveals small and medium businesses have exceeded their revenue predictions for Q2.

Related topics:  Commercial,  Commercial finance
Rozi Jones
20th August 2020
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"SMEs are once again proving their resilience and securing their role at the heart of the UK economy, especially in the face of the challenges posed by coronavirus."

At the start of April, SMEs predicted a 28% decline for the quarter, but the average reported loss of 14% was less severe than predicted.

Stronger-than-expected Q2 performance has led to a boost in optimism, with index scores jumping from 79 out of a possible 200 points at the start of Q2, to 95 points at the start of Q3. This is also reflected in business outlook – 36% of SMEs report a positive outlook for their own business this quarter, up from 21% in Q2. Across all sectors, SMEs predict a five% increase in revenue for Q3 compared to Q2, which grows to 14% over the next 12 months.

Additonally, the percentage of SMEs reporting that coronavirus negatively impacted their business has dropped this quarter, falling from 82% in Q2 to 74%. While the pandemic continues to cause disruptions, with 60% of SMEs expecting it to have a significant impact until at least the end of September, the future looks more positive – that number drops to just 13% by this time next year.

SMEs are also proactive in their own recovery – 80% plan to invest over the next 12 months, with new equipment & technology (32%) and marketing (28%) the greatest focus.

The biggest change SMEs have implemented to mitigate the effects of coronavirus is reducing staff numbers (26%), which rises to 47% amongst medium businesses.

Many SMEs can see life returning to how it was before coronavirus, with 42% expecting a return to ‘normal’ at some point, and a further 31% saying that the reason they won’t return to normal is because they have made small changes and improvements that they intend to keep.

Rob Cameron, CEO of Barclays Payments, said: “SMEs are once again proving their resilience and securing their role at the heart of the UK economy, especially in the face of the challenges posed by coronavirus. Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future by returning to work and thinking about investment.

“We welcome these signs of growth and optimism – and hope that SMEs continue to take advantage of the support available, whether from finance partners or the Government, in order to continue this recovery.”

Emma Jones, founder of Enterprise Nation, commented: “We’ve seen SMEs begin to emerge from lockdown in a place of strength – a huge testament to their resilience and their willingness to seek and take advice. It’s heartening to know that the Government support measures and resources have helped our nation’s small businesses during the pandemic.

“At Enterprise Nation, we’ve offered different types of support for SMEs at various stages of their journey, such as our Make a Plan diagnostic tool. We are hopeful that SMEs will continue to push through these challenging times and keep playing a role as the heart of the UK economy.”

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