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The last few weeks of 2023 lie ahead but already small and medium-sized enterprises (SMEs) in the IT sector are looking towards a better year to come, with plans to increase growth-supporting investments.
Research from Three Business has found that UK SMEs are expecting 14% growth in 2024 and combined they are preparing to spend £17bn to invest in their businesses.
When quizzed about where their sense of optimism was coming from, many referred to their businesses being resilient and emerging from the pandemic and cost of living crisis in decent shape.
The Ambition Index from Three Business adds to recent financial results from the channel that indicate that those running IT businesses have managed to get through the worst of the macroeconomic conditions.
IT firms are perhaps more optimistic than other SMEs, with Three Business discovering their investment plans were more ambitious than other sectors and levels of positivity were higher, with high numbers reporting the outlook for next year is better than they expected at the start of 2023.
Investments will be made across a range of areas, including marketing, customer service, adoption of digital technologies -which also covers AI - plus staff training and development.
The research revealed the lessons that many IT firms had learnt from the pandemic around the need for flexibility and strategy re-evaluation, had put them into a stronger position when it came to weathering the current economic storm.
“Small and medium businesses are the lifeblood of the UK economy. It’s great to see the strong sense of optimism and learned resilience that’s coming through among all SME leaders, in particular in the IT sector. These leaders have shown that they have risk-proofed their businesses and are now ready to invest in their future, grow and take on the challenges of the next 12 months," said Mike Tomlinson, managing director at Three Business.
Although the majority felt positive about the prospects for 2024 there were still concerns about their position with three-quarters of respondents sharing their belief that the uncertain environment has intensified the risks and pressures of running a small business.
Jeremy Janisch, director of Swindon-based IT services firm Culverdocs, said there had been a change in narrative from its customers.
“The last year has been difficult for our clients and a number of the smaller businesses have been struggling to survive. From our early conversations about next year, their confidence seems to be returning. Many are now in a position to spend more than they have in recent years. This will hopefully lead to our own growth and help to continue our recovery from the pandemic," he said.
The growing hope across the channel is that 2024 will see inflation rates continue to decline and interest rates hold if not lower. A consensus has been building around the recovery staring to fully kick in from the first quarter next year.
Areas of investment:
SMEs plan to spend their money across various activities next year, according to the findings of the Three Business Ambition Index, including:
- Staff recruitment
- Staff training and development
- Customer service
- Improving facilities or tools
- Digital technologies, including AI