Yorkshire SMEs to invest into growth plans despite rising costs

The growth strategies for medium-sized businesses in Yorkshire aren’t being affected by the impact of rising costs, according to new research by Yorkshire Bank.

The new survey conducted by the Bank, complied with 750 SME decision makers, revealed that although SMEs are experiencing rising costs, the majority are rolling out expansion plans as confidence in the UK economy grows.

69% of Yorkshire SMEs said their costs had risen in the last 12 months, with raw materials, staff salaries and utility and energy costs causing the most concern.

The effects of rising costs is most notable in the manufacturing, food and drink, hospitality and legal sectors. This may be a direct relation to the Chancellor’s Budget in July when he announced the introduction of a living wage – an increase in the national minimum wage for workers over 25. This increase, from £6.80 an hour to £7.20 an hour, will come into force in April next year. By 2020 this will rise to £9 an hour.

However, despite increased costs having an impact on the region’s SMEs, more than 77% are expecting to invest in their business in the coming year, with new equipment, premises and staff being top of the priority list. 34% believe their business’ turnover will grow by an average of 10% in the year ahead, and approximately 54% it will stay the same, while only 10% feel sales will dip.

SMEs are looking to invest due to regained confidence in the UK as a good place to do business. The survey also revealed 26% of businesses believe the Yorkshire economy is in a better position today than before the recession. Simon Wright, regional director for business and private banking at Yorkshire Bank in Yorkshire, said: “Despite rising costs, Yorkshire’s small and medium-sized businesses are demonstrating they have the financial flexibility to weather leaner periods and now have the appetite to grow. “We’ve spoken to hundreds of small businesses up and down the country and found many are working hard to protect themselves from these rising costs, but also extremely confident about the current state and future direction of our economy. “Through our bespoke lending initiatives we’re providing the flexibility they’re looking for to enable them to invest and expand where they see opportunities, whether that’s to create more jobs, purchase premises or enter new markets. “As a result, we are seeing small businesses innovating, creating new jobs and laying down foundations for the future.” Earlier this year Yorkshire Bank became the first to partner with the British Business Bank on its ENABLE Guarantee programme. Up to £125m of new lending by Yorkshire Bank, will help more small businesses achieve their growth ambitions.