SMEs see a strong start to 2024 despite hiring caution and sustainability concerns

A recent NatWest survey found that Britain’s SMEs have had a strong start to the year, demonstrating resilience and adaptability in the face of economic challenges.

The research, based on responses from 850 businesses across Britain, highlighted a positive trajectory in new business growth and manufacturing, particularly within the services sector. Notably, March was the fifth month in a row in which new activities grew, with many respondents attributing the increase to the start of new projects.

Sophie Milliken, founder of Moja, a marketing agency based in Newcastle, echoed the optimism shown by the survey results. Milliken cited a series of record months in the previous quarter and expressed confidence in the company’s trajectory. Milliken emphasized the importance of relationships and service quality in driving business success and underlined the importance of strategic planning and wise decision-making, especially in the area of ​​recruitment.

However, despite the generally positive sentiment, cautious recruitment practices were evident among SMEs, according to NatWest’s research. While some services companies expanded their workforces in March, growth was described as ‘soft’ and ‘marginal’, due to ongoing uncertainties, including the upcoming elections. Hannah Rowe, founder of Plymouth-based Rowe IT, acknowledged she is being more cautious about hiring, citing uncertainty over potential shifts in government priorities after the election.

Rowe IT, which primarily serves the public sector, faces challenges related to government uncertainty and changing priorities. The reluctance to invest in long-term projects amid election-related uncertainties has contributed to a cautious approach to recruitment and business planning.

As well as concerns about staff recruitment, NatWest’s research also highlighted SMEs’ attitudes towards sustainability. Although sustainability initiatives are gaining popularity worldwide, only 36 percent of companies surveyed consider sustainability a high priority for the coming year. This modest increase from the previous year underlines the ongoing challenges that SMEs face in integrating sustainability into their business strategies.

Rowe emphasized the importance of prioritizing sustainability efforts and noted their relevance for recruitment and retention, especially among younger generations. Despite the perceived challenges, Rowe highlighted the need for SMEs to take a proactive approach to sustainability, citing its potential impact on business growth and talent acquisition.

While SMEs have shown resilience and growth in the early months of 2024, challenges such as hiring caution and sustainability concerns continue to shape their strategic priorities. As economic uncertainties persist, small and medium-sized businesses must navigate evolving market dynamics while balancing growth ambitions with sensible decision-making.