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Over half of the UK’s SMEs (53%) say their business is in a better financial position today compared to 12 months ago, according to new research out today from CitySprint. Overall 88% say they are in the same or better shape financially.

The report, Collaborate UK 2015, finds that despite this confidence owners and decision makers at UK SMEs still see a challenging start to the year ahead. A lack of customer demand is seen as the biggest obstacle for the next twelve months, with a third in the survey (32%) citing this. This is quickly followed by increased competition for around a quarter (23%), again underlining the need to engage with new customers and tap into new markets. Access to suitable staff is third on the list (20%).

CitySprint-VanCollaboration remains a key business survival tool for smaller employers in response to these threats with 85% of the UK’s SMEs (some 4.5 million) collaborating with other businesses, sharing skills, expertise and mutual networks to drive their business forward. Given the challenges they have outlined for 2016, it’s no surprise to see that nearly half are doing this to generate sales leads and win new business (43%). SMEs are also collaborating to share best practice and advice (36%), outsource some of their functions (28%) or share operating costs (23%).

The majority (86%) say that the collaborative partnerships with other businesses they forged in the downturn and tougher times have placed them in better stead for the future.

However, with a rockier start to 2016 predicted by many, refreshing and renewing their collaborative partnerships is low on their agenda. Just one in five respondents say they would look to this first if the recovery stalls.

Patrick Gallagher, CEO of same day distribution company CitySprint, said:

Patrick-Gallagher-CEO-CitySprintDespite what is clearly a high performing year for them, the UK’s SMEs are not quite out of the woods yet. While the majority in our survey are confident about 2016, a more challenging start to it looks likely. Therefore it is disappointing to see that they appear to have forgotten the lessons they learned in tougher times. SMEs need to partner with others to help cut their cloth accordingly where needed and to generate new business

Mr Gallagher continued: “The benefits of collaboration are clear. Respondents who placed the greatest store in the partnerships they formed in the downturn report being in better shape financially, less worried about the future and less concerned about competitors.”

The UK’s future in the EU: While the majority (52%) of SMEs are seeking growth opportunities at a national level, over a quarter (27% – or some 1.45 million) are looking to win business and generate growth in international markets.

However the survey highlights some serious concerns that may hinder this international expansion. A potential exit from the EU is the biggest cause of uncertainty among senior leaders and owners of the UK’s SMEs; over a quarter in our survey highlighted this as a concern. This is followed by further political uncertainty within the UK (26%).

When asked specifically about the impact of a potential exit from the EU, almost two-thirds (60%) say this uncertainty is affecting their long-term growth plans and a quarter (25%) say this prevents them planning ahead to a significant degree.

Patrick Gallagher, said:

While the majority of UK SMEs in our survey are confident about 2016, a more challenging start to it looks likely, with EU uncertainty foremost in their thoughts when it comes to making long-term business decisions.

I think it’s clear to see that companies would welcome some clarity about our future involvement in the European Union and the last thing they will want is a drawn-out process around the referendum.

To download the full Collaborate UK 2015 report visit: www.citysprint.co.uk

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