Anthony Hawkins, Barclays Business Banking area manager for south east Wales looks at SME concerns for 2018...

Rising inflation and cybersecurity are the most common fears among British SMEs for 2018, according to new research from Barclays Business Banking.

SMEs believe these issues are most likely to negatively impact their growth in 2018, while consumer demand is most widely expected to have a positive impact.

According to Barclays’ annual SME Hopes and Fears Index, which asks decision makers at UK SMEs which factors they expect to help or hinder their business growth in 2018, inflation is most cited as a fear (by 43 per cent). 

It can increase costs for a business, and also impact the wider economy, with 36 per cent fearing the effects of prices rising faster than wages, which could put pressure on consumers.

Inflation is followed by the risk of cyberattacks (41 per cent) and the state of the UK economy (40 per cent). These factors are followed by fraudsters targeting small businesses (39 per cent), and Brexit and UK politics (35 per cent each), which rank sixth.

In May 2017, Barclays launched a major engagement campaign, Barclays DigiSafe, to raise awareness of cyberattacks, fraud and scams. 

It includes a £10m national advertising campaign, and provides customers with additional tools to protect themselves. Dedicated support for the bank’s one million SME clients has included free support clinics.

When it comes to the factors business owners expect to positively impact their business growth, consumer demand is most widely tipped to have a positive impact, with 50 per cent expecting it to do so. This is a change from last year’s results when just 22 per cent expected it to have a positive impact.

SMEs have become more positive about technology, with 48 per cent expecting that availability of better technology will have a positive impact on their business (37 per cent last year), and 42 per cent expecting e-commerce/digital presence to do so (23 per cent last year).

Reflecting the uncertain times, there is a near even split among SMEs about the outlook for 2018, with 46 per cent believing it will be a year of opportunities, and 49 per cent predicting a year of challenges. 

Most SMEs plan to maintain the same level of investment (65 per cent) and employee numbers (68 per cent) as for 2017. 

However, those making changes are generally positive, with 21 per cent planning to increase the number of employees, compared with five per cent planning a decrease, and 20 per cent planning an increase in investment, compared with eight per cent planning a decrease.

The research reflects small businesses being empowered by new technology and e-commerce. Compared with a year ago, more think these developments will have a positive impact on their business. 

From our work with small companies, we see them making more use of data and online services, including our own, that help them manage their marketing and finances more easily and effectively. 

By making the most of these opportunities, SMEs can increase sales, cut costs and save time, strengthening their business.

Inflation is clearly a worry, and in particular the potential for prices to rise faster than wages. 

Business owners are clearly taking a prudent and cautious approach to the year ahead. However, there are positive signs of SMEs investing more and hiring more staff.