Almost two-thirds of small businesses in the UK expect revenue streams to grow in the next 12 months, despite the uncertainty surrounding Brexit.
Direct Line polled 505 small business owners and found 64% anticipate growth in 2019, with the average firm expecting to boost revenue by 11%.
The report also revealed the reactive nature of UK SMEs, with 74% setting up their business to either scale up or downsize without affecting its overall viability – a practice known as ‘balloon business’.
‘Balloon businesses’ recruit and release employees in response to the business’s needs instead of following a continuous growth trajectory.
Nearly half (49%) of SME owners say their business’s headcount fluctuates throughout the year, followed by 32% of micro-businesses and 27 % of sole traders.
The research suggests more business owners are ready to let to their operations shrink in the short term to boost the chances of long-term success.
Professor Robert Blackburn, small business research centre director at Kingston University, said:
“Small firms operate in challenging environments, but it’s their agility and their ability to respond quickly to market opportunities and threats that enables them to survive and thrive.
“It’s important small firms are able to adjust their costs according to their requirements, rather than be burdened with a fixed outlay.
“Driving down fixed costs of the business is one way of achieving this, while the ability to flexibly manage their cost base can be the difference between success and failure.”
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