SME revenues in Scotland bounce back despite uncertainty

Over three fifths (68%) of SME revenues in Scotland are set to rise this quarter when compared to the same period last year, according to the latest quarterly Barclays SME Barometer.

On average, SME revenues in Scotland expect to see a 10.4% rise between the months of April and June 2022 against the same period in 2021, a positive sign of businesses bouncing back as pandemic restrictions have eased.

This follows a successful first quarter of the year (January 2022 – March 2022) for Scottish SMEs, with more than half (51%) reporting a rise from Q4 2021, and 56% reporting a year-on-year rise in revenue for the same period in 2021.

These figures are supported by data from Barclaycard Payments, which processes 1 in 3 debit and credit card payments in the UK, which shows a rise of 28.6% in the value and 29.1% in the volume of payments to SMEs in Scotland in the same period (January – March) versus pre-pandemic figures.

The predicted boost in revenue is welcome news for small businesses who are facing a number of challenges including rising inflation, fuel and energy price increases and difficulty hiring new workers.

Over three quarters of Scottish SMEs (79%) say that rising living costs, energy bills and inflation are a long-term concern for their business. Over half (56%) worry that the rising costs will negatively impact consumer spending and almost a third (30%) fear it will make them less competitive as they are forced to increase their own prices.

36% said they may need to re-evaluate their operations to reduce the amount of energy they use.

While they remain confident about the future of their businesses, half of Scottish SMEs (50%) have a pessimistic outlook on the prospects for the wider UK economy, compared to 46% of businesses UK wide and almost half (48%) say that the current business environment is unstable, compared to 41% UK wide.

Colin O’Flaherty, Head of SME at Barclaycard Payments, said: “After an exceptionally tough time, it’s encouraging to see that businesses have seen revenues rise over the last few months, despite a challenging economic climate.

“We hope the long weekend will provide a welcome and much needed confidence boost to many SMEs, as consumers look to get out, support local businesses and make the most of the four-day weekend.

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“However, it’s not surprising that in the immediate term, cost of living increases, rising inflation and difficulty hiring new workers are a major cause of concern for small business owners. It’s vital that they continue to tap into the support of the wider business community to get through yet another difficult period.”

Additional findings reveal that despite the challenging environment, the majority (91%) of SMEs in Scotland say they are planning to invest in their businesses over the next 12 months. Almost two-fifths (39%) plan to recruit new staff, while 34% plan to invest in new equipment and technology and 26 per cent plan to invest in reskilling or upskilling staff.

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