Better financial management seen as key to future SME growth

31st March 2015 | News

Around three-quarters of small business owners in the UK view better management of financials as the cornerstone of future business growth, according to new research.

The latest quarterly British Business Barometer from Hitachi Capital revealed that improved financial planning is potentially being carried out at the expense of business innovation, improvements and investing in the future.

As small firms remain increasingly restrained by red tape and regulation, the research demonstrates that many small business owners are focusing more heavily on financial objectives which may be limiting their long term growth prospects.

In comparative terms, the importance of investing in the future of the business (17 per cent) and innovation (37 per cent) are viewed as significantly lower priorities in comparison to better overall financial management.

The Q1 2015 British Business Barometer indicates a positive shift in focus for business growth with a 16 per cent increase in recruitment since Q4 2014 and a 13 per cent increase in investment of new equipment for businesses.

However, fiscal prudence remains the order of the day among the majority of companies, who remain most concerned with keeping a tighter rein on fixed costs and managing cash flow than any other area according to quarter-on-quarter figures.

The report drills down to industry sectors which found that manufacturing companies are focusing on recruiting new staff the most in Q1 2015 with 26 per cent compared with only 15 per cent in Q4 2014.

Gavin Wraith-Carter, general manager, Hitachi Capital Business Finance, said: “As the research states, the management of financial affairs is always the most critical role – and arguably becomes even more so when businesses are coming out of a recession mindset and opportunities start to resurface.

“However, in order to achieve and sustain growth over the longer term, it is obviously essential to recognise the need for ongoing investment.”