How confident are business owners going into 2018?

Nearly 9 in 10 small and medium sized enterprises (SMEs) expect to be selling online by the end of next year compared to 64 per cent of SMEs who say they sell online today.

This is according to the Q4 2017 SME Growth Tracker, a report by Capital Economics commissioned by Amazon UK and Enterprise Nation.

The report now in its second year and informed by a comprehensive YouGov survey of over 1,000 SMEs, provides an assessment of the confidence and health of British SMEs.

The significant increase in the number of SMEs planning to use e-commerce in the coming year is primarily driven by a surge in business owners planning to sell via their own company website (rising from 50 per cent to 68 per cent) and their own mobile apps (increasing from 13 per cent to 24 per cent).

More businesses also expect to sell via third party online retailers (rising from 21 per cent to 27 per cent).

The survey also shows that SME confidence in the broader UK economy has slightly deteriorated this quarter with the SME Growth Tracker Economy Confidence Index score edging down to -24 compared to -22 in the third quarter and -15 in the fourth quarter of last year.

This year, confidence in the economy was lowest in the second quarter soon after the general election, when the Economy Confidence Index score fell to -27.

Confidence of small business owners in the prospects for their own business is largely stable this quarter with an SME Growth Tracker Business Confidence Index score of -7 compared to -8 in the third quarter.

However, the index is lower than last December’s -4.

The overall lack of confidence this quarter was shared by SMEs across the UK with the exception of SMEs in the West Midlands who expect business conditions for their own company to improve slightly over the coming year (score of +6).

Mark Pragnell, Chief Project Economist at Capital Economics, comments:“Our thermometer of SME confidence remains below zero, with few owners and managers still seeing a lot of headwinds in the economy.

“But while the figures show confidence remains low among SMEs as a whole, e-commerce users are less pessimistic about business conditions over the next twelve months.

“This is perhaps due to their expected increase in revenue over the festive period from online sales. Given these results, it is no wonder that more SMEs expect to start using digital tools to sell goods and services in 2018.”