Small and medium enterprises (SMEs) are increasingly optimistic as economic recovery from the COVID-19 pandemic continues, according to a study by premium finance firm Premium Credit.
The study found that 37% of SMEs expect their revenues to increase over the next 12 months, with 15% predicting increases of 10% or more. Twenty-six percent expect revenues to fall over the next 12 months, while 18% expect them to stay the same. Twenty-one percent said they do not know what will happen over the next 12 months.
The general recovery from the impact of the COVID-19 pandemic was cited as the main driver for revenue growth by 58% of firms expecting growth, while 35% said it will be driven by launching new products and 34% by entering new markets.
Among firms that predicted falling revenues, 33% said they are still suffering from the impact of the pandemic, while 32% said they have lost clients, some of which have gone out of business.
Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, found that SMEs’ savings are being depleted. Twenty-seven percent of firms said their savings fell in the past 12 months, while 20% reported increased savings. For this year, around 5% had no savings, compared to 7% last year.
“Rising confidence among SMEs is good news, but companies clearly still face a lot of challenges in the year ahead and many have depleted their savings as they start to invest,” said Owen Thomas, chief sales officer of Premium Credit. “Premium finance is a very cost-effective way for businesses to buy insurance, and better manage their finances and cash flow by spreading payments. Our research shows nearly six out of 10 SMEs use some form of credit to ensure they can still afford business-critical insurance.”