Many SMEs are confident of growth…are you?
The results of our Q3 Vistage CEO Confidence Index – our quarterly barometer of UK & Ireland CEO sentiment – show that SMEs still have some concerns about the overall economic situation. However, when it comes to plans for growth – in multiple senses of the word – our SME CEOs are feeling more positive about the year ahead.
Read on for some of the highlights of our most recent report – and to download the report in full (free of charge), click here.
Overall confidence continues to fall
The overall confidence of SME CEOs increased between Q4 2022 and Q1 2023. However, since then it has steadily declined. From a score of 104.7 in Q1, CEO confidence has now reached 94.7.
While this is nowhere near the post-pandemic/Brexit lows that we saw, it demonstrates that many SMEs are still concerned. 55% believe that economic conditions in the UK & Ireland have become worse over the last 12 months, while a quarter believe that conditions will be worse still in 12 months’ time.
Just how bad things will become is a matter of opinion. Only 8% of CEOs believe that a soft landing has already happened, while 27% believe it will happen in the next 12 months. 54%, meanwhile, believe that the UK is either in or approaching another recession.
CEOs reveal ambitious growth plans
Despite their perception of the state of the economy, many SME CEOs are confident of business growth in the coming year. 58% expect their sales revenues to increase in this time period, and 47% are expecting an increase in profitability.
Many also have plans to expand their teams. 47% state that they expect their total employee numbers to rise in the next 12 months, while 35% say that team sizes will remain constant and just 18% expect to decrease their headcount.
A key factor in this growth, it seems, will be a focus on strategic planning.
A focus on strategic planning
Vistage MD of International Operations (UK), Andy Perkins, says that the SME confidence demonstrated in our recent Index results represents “a true testament towards business resiliency, and the power of strategic planning and leadership.” But what exactly are SMEs doing when it comes to strategic planning?
The main approach for most – 79% of our respondents – is to use internally developed resources and processes. However, that isn’t to say that external solutions aren’t being considered.
As we found in our Q2 2023 report, AI adoption amongst SMEs is relatively low. However, this quarter’s results show that 30% of SMEs intend to reallocate budgets to facilitate incorporating AI into core business operations. 26%, meanwhile, plan to make more budget available to work with vendors in the AI space.
This focus on strategic planning also includes acquisitions – as well as developing exit plans. 77% of SME CEOs plan to make strategic acquisitions over the next two years. 58%, meanwhile, say that their plan is to sell the business in the next two to five years, with a further 54% stating that they are considering exiting their business during this same time period.
What do the next 12 months have in store for you, as a business leader?
For more on our Q3 2023 CEO Confidence Index, download the full report free of charge.