A year of leaving fossils behind
How optimistic should we be about 2023? On one level, it feels as if optimism ought to be in greater supply over the next 12 months if only because 2022 has been such a difficult year. After all, we seem to have an innate capacity for optimism and it doesn’t appear to have been exhausted even after the last three years.
Besides, the event which has had the biggest distortionary effect on 2022 – namely Russia’s illegal invasion of Ukraine – is also potentially the one with the greatest cause for optimism. The invasion has been a disastrous failure and not just militarily. Energy policy is being reconfigured as many countries learn, much faster than they expected, the sheer folly and reckless endangerment of relying on fossil fuels (and the discreditable regimes that house and supply those resources) into the future.
That said, the “things can’t get any worse than they are now” argument is not the most reliable when it comes to expecting an upturn in the near future. Sadly, they sometimes do.
In this context, it was interesting to read the findings from the latest version of the Linked Finance SME Confidence Index. The good news is that business optimism in Q3 2022 was still quite high at 59.7%. Unfortunately, that’s the lowest level since Q4 2020. On another positive note, 32% of SMEs said they expected business activity to be higher in Q4 this year while 41% predicted it would be the same.
Business growth, on the other hand, did take a bit of a hit. In Q3 2021, 51% of SMEs reported higher business activity, a figure which fell to 36% for the same period this year.
In response to soaring inflation, many SMEs (41%) raised their prices in Q3 but it is still notable that more than half (54%) made no changes. Just under a third (30%) had a higher operational profit in Q3, a third (33%) suffered a decline and 38% were unchanged. Overall, that seems pretty good given the circumstances.
Powerful choices
Energy was another area where 2022 caused minds to become more concentrated on an issue which, up until Russia’s invasion of Ukraine, had merely been lurking in the background. Not any longer. As many as 35% of SMEs said they were planning to invest in energy efficiency measures in the next 12 months to help combat rising energy costs.
That’s also a good thing, although it would be even better if that figure was higher, although the percentage does go up to 53% for mid to large SMEs. Logically, you’d expect them to be heavier energy users than their smaller counterparts, meaning the energy efficiency gains should be quite significant.
It’s also worth mentioning that half (49%) of all SMEs planning to invest in energy efficiency measures intend to do so within the next three months. So that’s definitely grounds for optimism in 2023.
According to Linked Finance CEO Niall O’Grady, it has already seen an increase in the number of companies borrowing for quick finance to invest in energy upgrades to combat rising energy bills.
“As inflationary pressures hit businesses with an increase in input costs in areas such as materials, rent, and food, it is the rise in energy costs that is proving the real pinch-point,” he commented. “To address climbing energy bills, SMEs are taking a proactive approach by improving their energy efficiency.”
The focus on energy efficiency is something that will stand SMEs in good stead into the future. Even if energy prices come down, they’ll still be saving – and it will benefit the environment and the country as well.
A number of channel partners fall into the SME bracket and will be dealing with some of the same issues identified in the Linked Finance report. Being in the same boat, so to speak, should help them strengthen their position as ‘trusted advisor’ by enabling them to identify the concerns and preoccupations of their SME customers and, hopefully, address them.
Energy efficiency is an area well worth exploring in terms of the IT equipment and services employed by SME customers. It’s certainly something vendors are starting to push more too.
Will 2023 be better than 2022? You have to think so, don’t you? We can’t be far off the point where, as the song puts it, “things can only get better”. For many, let’s hope that point is 2023.
Subscribers 0
Fans 0
Followers 0
Followers