As these obstacles started to ease, supply chain issues such as delivery and availability of materials, plus a lack of trained staff have reared their head and caused headaches for directors of firms of all sizes.
However 2022 is only weeks away, and with the vast majority of the population now vaccinated, concerns about further economic toil caused by lockdowns are starting to fall away, and although still not resolved, steps are being taken to help ease the supply chain crisis1.
Owners and leaders of businesses across the UK are now turning their attention to their plans for 2022 and to find out how commerce is preparing for the year ahead, Gallagher commissioned research amongst 1000 business owners and directors to understand how they have fared over the last 12 months and their views about the growth prospects for their firm over the coming year.
Despite the turbulent last 20 months, business leaders are positive for the outlook of 2022 with many reporting that they feel that the economy is getting back on track. In fact 69% of business leaders said that they were either sticking to their previous plan for growth (19%), planning for a somewhat increased growth (32%), and an assured one in five (18%) are planning for a phase of significant growth.
Looking at the sectors that are most confident, construction topped the list with one in three directors (34%) saying they are expecting significant growth and 24% are planning for a steady level of growth. This reflects the current level of opportunities in construction with both the commercial and residential reporting increased availability of work which is expected to continue into 2022 and beyond2.
Despite this buoyant outlook, the construction sector isn’t without its issues, with lack of staff (53% of firms said this was an issue) and supply chain issues heavily impacting the industry. IT followed in terms of confidence with a net 62% of directors in this sector reporting either steady or significant growth prospects, driven by our ever increased demand for tech at work and in our private lives.
Hospitality and leisure, arguably one of the worse affected sectors during the pandemic, also looks to be planning a comeback with one in three businesses (33%) saying they expect to grow over the coming year and one in seven (14%) reporting major growth aspirations.
At the other end of the scale, where growth projections are more muted, healthcare and finance were the two sectors which reported downgrading their plans for growth at 32% and 28% of businesses respectively.
Risk management during a growth phase
Taking calculated risks is intrinsic to growing a business, and Gallagher can help give business risk management advice to ensure that they have undertaken the right assessments and planning to help ensure their success.
From an operational standpoint, businesses taking on additional members of their workforce, expanding to new premises or taking on more stock all need to consider the insurance implications, so should speak to their broker who can update their insurance cover to reflect any changing risks.
It’s all about the people
When business were asked about problems they may anticipate in 2022, the highest area of concern was staff availability, with over one in three business leaders (36%) saying this was their biggest obstacle. On a similar thread lack of expertise followed not far behind with one in five (20%) bosses citing it as a worry. Lack of staff availability was highest in IT and in finance with half (48%) of all bosses in both sectors saying it was their number one obstacle to growth.
However, it’s not all bad news, as this demonstrates the buoyant market for job seekers. Across all industries, the top skills most in demand currently include technology, sales and digital3 which fortunately are also amongst the most popular at further education, meaning that when students leave higher education their skills will be greatly valued4.
Of course, there is no boss of a firm that doesn’t worry about debt and cash flow and missing payments have been an issue over the last two years, with 56% of business leaders reporting that new clients they had taken on had fallen through or not paid. As a result, although many firms are targeting renewed growth, there is still a level of caution with 80% of bosses saying they are cautious about spending to grow, rising to nine in 10 (89%) of construction directors and 83% of leisure and hospitality leaders. However there are steps businesses can take to protect it against financial losses when it is in growth mode.
Trade credit insurance is a key tool when a business is changing and taking additional risks. This can be used to help protect against bad debt, and also to protect against non-delivery through the supply chain. In the event of an invoice not being paid by a client, or a supplier not delivering goods as promised or on time, trade credit insurance will cover any financial losses.
Trade credit has seen a step change over recent years and historically seen as only an option for largest firms, innovation has seen new products become available, that can insure against specific projects, or clients at a small one off cost – making the cover affordable and accessible to even the smallest of businesses.
Businesses who would like to know more should speak to their insurance broker who can give advice on what cover would be most suitable.
All data unless otherwise stated is taken from research conducted by Opinium, between 9th – 16th September 2021, among 1,000 senior decision makers in UK businesses.