We must maintain momentum for Scottish SMEs in 2024 - William Devine

Scottish SMEs face an exciting yet challenging year. The Department for Business & Trade’s recent small business survey has illuminated a promising path for these resilient businesses, with 27 per cent expressing confidence in expanding their workforce, 46 per cent anticipating a surge in turnover, and an impressive 82 per cent revealing they turned a profit or surplus in their previous financial year. These statistics paint a picture of optimism, but it is important they are considered in full context, as three-quarters of Scottish SMEs currently rely on external financing. So, the question remains as to what businesses need to keep forward momentum alive in 2024.

William Devine

Over the past year we have observed that despite the combined challenges of rising interest rates, delayed payments, wage pressures and inflation, Scottish SMEs are forging ahead, bolstering their businesses to withstand the storm. Through conversations with customers, we know that this will only continue to be possible if innovative funding solutions are offered to them that best serve their businesses. In many cases this means funding that allows them to invest in their business to maximise growth, whether that be technology, people or machinery. In fact, when looking ahead, 23 per cent of Scottish SMEs are planning to invest in research and development and 69 per cent intend to enhance the skills of their workforce.

It’s particularly important, in this challenging business environment, to assess these businesses beyond just the balance sheet. At the heart of this is technology that, when combined with a people-led approach, can really understand the individual circumstances and ensure a suitable level of funding is provided to support their immediate needs and future business prospects.

This desire to support productivity and growth must be a priority, particularly given SMEs account for 99.9 per cent of the private sector business population, three-fifths of employment and half of turnover in the UK private sector. While many Scottish SMEs are predicting growth there is also a resounding echo of the need for market stability among business owners so they can assess where they truly stand and make longer term plans.

Scottish SMEs are doing well but only proper support will keep the growth coming (Picture: Adobe)

As we stand at the beginning of 2024, ambitious targets have been set by the government and the Bank of England to halve inflation and reduce interest rates, but the success of these goals relies on government and lenders working together. Introducing measures to address late payments to SMEs for the vital work they do and creating the £150 million Scottish Fund are positive steps on this path. However, there is a pressing need to highlight funding options available to SMEs on an ongoing basis if we are to maintain this positive momentum.

While Scottish SMEs have weathered their fair share of economic storms, they should not have to face them in isolation, and instead, must receive a mixture of the right support and advice available from lenders, who work as partners to business leaders. It is paramount that Scottish SMEs receive the support they need to sustain growth. A shared endeavour between government, industry, lenders, and business owners will mean that Scottish SMEs are able to continue to play their part in driving the Scottish economy forward.

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William Devine is Head of Scotland at Simply Asset Finance