THE UK’s five million small businesses and medium-sized enterprises should remain cautious and not be lulled into a false sense of security, despite upbeat forecasts about the UK’s economic outlook this week, according to Ingenious Britain.
The small business advice hub said that whilst the signs are promising and signals suggest the recovery is gaining momentum, the UK economy remains fragile and small businesses should plan for growth whilst continuing to deploy the tactics that have enabled them to survive so far.
The British Chambers of Commerce this week reported an increase in sales and optimism in the third quarter.
Service firms saw UK sales and orders rise at their fastest pace since 2007, while the rises for manufacturing were the sharpest since the early 1990s.
At the same time, the International Monetary Fund upgraded its forecast for UK growth this year to 1.4 per cent, up from July’s estimate of 0.9 per cent and has increased its prediction for next year to 1.9 per cent, from July’s projection of 1.5 per cent.
“The signals are encouraging, but we still have some way to go,” said Mark Moore, director of Ingenious Britain, a campaigning group which promotes small and medium-sized businesses.
“The recovery is not yet robust and whilst we think small businesses can look forward with more optimism than for some time, they should keep a tight rein on their activities and, particularly, ensure they conserve cash wherever possible.”
Mr Moore said that the most important thing for the UK’s SMEs is for the recovery to be sustainable and that may mean being more conservative in the short term in order to be in the best position to exploit recovery once it is established.
Mr Moore added: “Small businesses will want to put themselves in the best place but they should be planning for the future in a way that fits the current cash profile of their business not what they imagine it might become.
“Take advantage of digital and social marketing options, which can be more quantifiable and cost effective, keep a tight rein on costs to ensure cash is kept within the business, look at the likely impact of business rates on your business, ensure you are invoicing on time and taking whatever steps you need to get cash in on time and, if you are considering taking on staff, try and do so only if you can be confident those jobs are going to be sustainable.”