SMEs are sacrificing growth opportunities as they deal with escalating costs and underwhelming productivity.

New research carried out by Simply Asset Finance, the specialist business lending provider, looked at business concerns throughout the UK and its regions, as well as how SMSs are preparing to tackle them and what it means longer-term.

Looking at UK SMEs’ top concerns, rising operational (79%) and supply chain (75%) costs top the list. But productivity (72%) comes a close third. Trying to manage the top two means that too often, businesses are having to prioritise meeting spiralling costs over investing to solve their productivity issues and readying themselves for growth. This is further evidenced by the fact that a fifth (20%) of businesses have had to overhaul their finances in the past year, with just 13% saying this was to help expand the business. 86% said they would restructure their debts if they had the opportunity, highlighting that the profile of funding they have accumulated over the past years is no longer fit for purpose.

In the past 12 months, just one in five businesses have invested in new technology (22%) or equipment and machinery (20%). And one in five (20%) have introduced new/improved training programmes. It’s in the North East where we find businesses most readily investing for growth: in the past year, almost a third (32%) have invested in new technology and 28% in new equipment or machinery. Comparatively, the corresponding figures for the South East are 18% and 15%.

Among these SMEs, cost concerns are such that the average SME has around £85k set aside for contingency costs – a significant sum that’s not being invested in growth. Notably, there’s also a huge disparity between the regions in terms on the size of their contingency pot. While SMEs in the East of England have £132k on average, those in the South West have just £52k.

52% of SMEs feel their business needs are misunderstood or overlooked in today’s climate. Businesses in the East of England feel the most disconnected, with almost three quarters (74%) saying that they feel like their business needs are misunderstood or overlooked.

Despite this, confidence is high when it comes to business outlook. More than two in five (83%) of UK SMEs say they’re optimistic about the future success of their business. In the West Midlands is also where we find SMEs the most optimistic about the future for their business (92%).

Mike Randall, CEO at Simply Asset Finance, said: “The last few years have been a tale of unparalleled hardship for UK SMEs. After a seemingly endless grind through Covid, economic stagnation, and spiralling inflation, there is growth on the horizon – and the fact that some many SMEs are optimistic about their outlook is incredibly encouraging.

“But if they are failed now, then all that hard work will have been for nothing. It’s essential that businesses across the UK don’t just have suitable funding and support available to them, but that they know about it too. Businesses shouldn’t need to hold back cash that could have been invested in growth in order to keep the lights on. Crucially, both their own and the wider economic situation may have shifted since they last structured their financing meaning that it may be possible, beneficial, and in fact advised, that they restructure their debt. This could help give them much welcome breathing room that they just didn’t realise was now available.

“It’s here where experienced and innovative finance providers really show their worth; by looking beyond the balance sheet to understand the unique wants and needs of SMEs – then giving them the on the ground support they need to seize on those hard earned and transformative growth opportunities in regions all over the UK.”