SMEs more optimistic than pre-pandemic, anticipating 10% boost to profits in Q2

Business sentiment is also starting to look more positive, at 110 points out of a possible 200. This is up from a low of just 79 points in Q2 2020, and means SMEs are back to the same pre-pandemic sentiment levels of 110 last seen in February 2020.

85% of SMEs plan to invest in their businesses over the next 12 months, mainly by recruiting staff, investing in new equipment or technology, and upping marketing efforts. After a tough year for many jobseekers, a reassuring 47% of SMEs also expect to increase their staff over the next year.

Over half (51%) of SMEs expect an increase in revenues from 17th May, when the next stage of restrictions will be lifted. Looking ahead, SMEs are forecasting an 18% increase in revenues a year from now, with the hospitality and leisure sector expecting a 42% boost. Many SMEs have an optimistic (33%) or neutral (40%) outlook for the UK economy, which increases to 51% optimistic and 36% neutral about the prospects for their own businesses.

Despite signs of optimism, potential challenges remain for the coming months. Of those who expect lower demand between now and 21st June compared to pre-Covid, many (37%) expect, after an initial burst, customers will hold back their spending until 21st June. Others are concerned that people now prefer to socialise and eat at home (33%) or will tire of social distancing measures (34%).

However, hospitality and leisure SMEs are prepared for customers once they fully open back up, and have invested in free hand sanitiser (65%), signs to remind customers about social distancing rules (61%), PPE for all their staff (53%) and training new staff or those returning from furlough (38%) ahead of May re-openings when most indoor restrictions lift.

Hospitality and leisure SMEs are also looking at ways to increase revenues after a difficult year including increasing prices (21%) and investing in improving outdoor spaces (16%).

Rob Cameron, CEO of Barclaycard Payments, said: “As restrictions lift, it’s reassuring to see the highest level of SME optimism since the SME Barometer launched, with expectations of a long overdue boost for the hospitality and leisure sector. With the confidence to plan ahead, small businesses have turned their attention to bulking up their workforce, as well as investing in technology and marketing. We’re looking forward to seeing this confidence translate into sales, and we continue to support small businesses as they further increase their stronghold in the UK economy.”

Kate Hardcastle MBE, independent expert, added: “Speaking to small business owners, while they’re excited to be back in action, there’s a natural cautiousness about interest dropping off after an initial burst of spending. However, the overarching feeling is one of hopefulness for the year ahead – and with that, a drive to invest in their business and people. What they need now is our support. As we hit the summer months, I would encourage us to all do our bit to help our local SMEs and support their recovery.”