The growth forecast for Welsh small businesses has significantly improved in the past three months, with a third of small business predicting significant or modest expansion (33%). This signifies a marked improvement on the previous quarter, where only a fifth were predicting growth (22%) – its lowest level in two years.

The figures for the proportion of businesses anticipating a period of contraction or struggling to survive also paint a positive picture, with only 19% of businesses in this region predicting decline, compared to 30% in Q4’22.

This data comes from research conducted by Novuna Business Finance, who have been tracking small business growth outlook every quarter for the last decade with their Business Barometer, in order to understand and provide insight into the small business community, and how they respond to various obstacles.

Despite a positive quarter, Welsh enterprises still have significant concerns

At a time when there are a number of concerns plaguing the small business community, Novuna asked small business owners and senior decision makers which in particular were keeping them awake at night.

At the top of the list of concerns, general economic volatility was the concern most often cited. Compared with a year ago, the proportion now concerned about this rose 9% to 37%. Other areas that rose in importance in the last year were to do with staff, including recruiting staff (+4% to 10%), and employee skills gaps and shortages (+4% to 15%).

Compared with the national average, Welsh enterprises were more likely to be concerned about compliance and regulations (32% vs 15% national average) and red tape (25% vs 16% NA).

Defensive measures most popular when securing growth

When it came to how they intended to secure further growth, defensive measures were the most popular – particularly in this region. Being stricter with timely payments from clients (25%), reducing fixed costs (47%) and improving cash flow in the business (21%) were the most popular tactics to expand, with methods such as exploring new, overseas markets further down the list.

Jo Morris, Head of Insight at Novuna Business Finance said:

“Despite severe headwinds of an uncertain economic environment, spiraling inflation, and high energy costs are presenting a particularly challenging playing field for businesses, confidence among businesses in Wales remains resolute. While this stormy weather endures, it is important not to lose sight of the longer-term horizon. Whether growing, restructuring or consolidating, every business needs a plan and Novuna Business Finance will be there to support established enterprises that are working on strategies to adapt, grow and fulfil their potential despite the enormously challenging context.”