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This year is said to be the worst economic environment for small and medium-sized enterprises (SMEs) in 15 years, according to Bibby Financial Services’ Global Business Monitor 2023.
While SMEs are said to be upbeat about their own prospects, this comes despite decision makers from nine countries reporting that inflation (55%), energy costs (49%) and uncertainty over local economies (28%) are stifling business growth in 2023.
According to BFS’ monitor, the vast majority (85%) are confident about their prospects for the remainder of 2023, while nearly two thirds anticipate that sales will increase over the coming months.
However, the firm has found that Republic of Ireland SMEs are “hugely” optimistic, with 90% saying they feel confident about their prospects, while in the UK there is greater caution, with 54% predicting only a slight increase in sales.
Despite an optimistic outlook, cashflow remains an obstacle to progress for SMEs across international markets. Findings revealed that 26% of small businesses have insufficient cash flow to grow, and 10% don’t have enough to operate effectively on a day-to-day basis.
However, amid a backdrop of rising interest rates, many are considering alternative methods of financing to traditional sources.
Jonathan Andrew, CEO of Bibby Financial Services, said: “While the overriding sense of optimism is encouraging, slow growth across international economies, inflation and rising interest rates are beginning to impact supply-chains. For small business owners, there is no one-size-fits-all solution to navigating the uncertain outlook ahead.
“It is evident that the post-2008 era of low-interest rates has ended. This draws to a close access to cheap finance for individuals and businesses alike. It is not only the cost of finance that is at risk. With traditional financing sources re-evaluating credit appetites, there is a very real possibility we may be entering a commercial credit crunch of sorts.”
He added: “It is critical that SMEs can continue to access the finance they need to operate and grow. This means considering a range of financing options that provide sustainable working capital and cash flow to help them overcome challenges and take advantage of opportunities that arise over the coming months.”
