Small to mid-size businesses form the backbone of the UK economy, employing over 16.1m people (60% of private sector workforce) and representing 51% of UK’s private firm turnover*.
Simon Hodgin, Regional Manager, UK South, takes a closer look at the latest Risk & Confidence Survey findings** to understand the risk perceptions of mid-size companies (£25m-£100m turnover) who play such a vital role in the UK economy.
Mid-size businesses lack the confidence of larger firms
Despite the challenging economic and regulatory environment, we found that overall, levels of confidence are staging a weak recovery following the dramatic dip in Autumn ’17 that coincided with the surprise result of the UK snap General Election. However, the confidence of business leaders is still a long way short of the heady heights of Spring ’17.
The business leaders of mid-size businesses are notably less confident about their ability to thrive and prosper than large businesses (£1bn+ turnover). In fact 57% of leaders of large businesses expressed confidence in their ability to grow in Spring ’18, compared to only 36% of leaders of mid-size firms.
Part of this lack of confidence from mid-size businesses is that they can suffer from a lack of resources and sophisticated risk management options that are available to larger businesses in times of need, therefore struggle disproportionately to deal with the complex challenges. There is no doubt that size, scale and buying power offers additional protection and access to specialist resources in uncertain times.
Regulation and Cyber risk are a double whammy for mid-size businesses
The shifting risk environment is always a challenge, but Spring ‘18 saw the regulatory burden piling up with the ramifications of Gender Pay Gap reporting placing businesses under additional stress; with the deadline requiring extra management focus, resources and budget, at a time when gender politics and the #metoo campaign have been consistently making headlines.
But it’s perhaps the introduction of GDPR that caused the greatest stress for the leaders of mid-size businesses. The high profile and broad ranging cyber-attacks that happened towards the end of 2017 alerted business leaders to the very significant impact that a cyber breach can have on their business. Combined with the strict rules, and penalties imposed by GDPR, anxiety levels have been raised, with 33% of the leaders of mid-size business now feeling ‘cautious’ in their outlook, compared to only 18% of business leaders of the better resourced, larger businesses.
Mid-size businesses more positive on Europe
Of course, the impact of Brexit dominates planning for all sizes of business. Since Autumn ’17 our research shows that companies of all sizes have been turning their backs on Europe in favour of domestic growth. However, mid-size businesses are notably more optimistic about their prospects in Europe looking six months ahead than their larger competitors, with almost one third (31%) believing that by Autumn 2018, Europe will have the greatest capacity to drive growth.
Summary:
It is good to see that in these fast moving and uncertain political times, mid-size businesses that are so vital to the UK economy, remain ambitious, despite the many risks they face. We are committed to working with these businesses to help them to manage and identify the threats that could knock them off course.
Simon Hodgin
Regional Manager, UK South
[email protected]
*Fsb – small business statistics - https://www.fsb.org.uk/media-centre/small-business-statistics
** CNA Hardy – Spring ’18 Risk and Confidence Report