One in three small businesses in hospitality sector predict growth this summer

Wednesday 12th July 2023

More than a third of small businesses (34%) in the hospitality sector are predicting growth over the next three months. Building on a strong Q2 (38%), the growth predictions of small businesses in the sector represent the strongest level of confidence for any period since Covid struck in April 2020: according to new tracking research from Novuna Business Finance.

Percentage of hospitality small businesses predicting growth each quarter by sector

2023

Q3

2023

Q2

2023

Q1

2022

Q4

2022 Q3

2022

Q2

2022

Q1

2021

Q4

2021 Q3

2021 Q2

2021 Q1

2020

Q4

2020 Q3

2020

Q2

34%

38%

24%

26%

31%

41%

29%

34%

30%

32%

7%

18%

14%

11%

The positive findings for the hospitality sector tie into a broader theme from this summer’s data which reveals a two-year high for the proportion of seasonal businesses predicting growth for the quarter ahead. The Novuna Business Finance study reveals that 40% of small businesses that have a seasonal business model predict growth for this summer, a 25% rise on the start of the year and a favourable position compared to non-seasonal businesses, where growth forecasts have fallen for the fourth consecutive quarter.

The findings are from Novuna Business Finance’s Business Barometer study, which has tracked small business growth forecasts every quarter for the last nine years. Whilst the national picture remains unchanged on the previous quarter – with the percentage of small businesses predicting growth holding firm at 31% - the representative survey of 1,103 small business owners revealed significant divergence by sector, age and region.

Sector analysis: Contrasting fortunes with highs and lows

Aligning with the positive findings for seasonal businesses, the latest data for small businesses in the agriculture and hospitality sectors showed signs of much-needed stability after a torrid time through the lockdown era. In agriculture, for the third consecutive quarter, more than 30% of business owners predicted growth (31% for the current quarter) – a significant rise on the previous two years where the percentage of enterprises predicting growth ranged between 11-22% [see table in notes to editors].

In the hospitality sector, growth forecasts have also improved – up from 24% to 36% over the last six months. In the transport and distribution sector, growth forecasts hit an 18-month high at 35%.

Set against this, growth forecasts in the retail sector hit a 12-month low, falling to 27% and the percentage of small businesses predicting growth in both manufacturing and IT/telecoms hit a two-year low (32% and 35% respectively).

In the construction sector, growth predictions remained volatile quarter by quarter. For the current period, the percentage of small business owners predicting growth fell sharply in Q2 (from 31% to 24%), although this figure remains higher than was the position at the start of the year.

Regional analysis: Mixed picture around the UK

A regional analysis of small business growth predictions also presented a mixed picture. Whilst quarterly growth predictions show signs of stability and consistency in London, the South East and Wales, the latest Novuna data shows big swings elsewhere. For example, in Scotland, the North East and West Midlands there is a 12-month high for the percentage of small business owners predicting growth. In contrast, in the North-West and East Midlands, small business growth predictions have hit a 12-month low point [see table in notes to editors].

At a time when the UK economy is in a relatively fragile position – impacted by inflation, the ongoing war in Ukraine and the pressure on living standards, our summer study shows a mixed position from the small business community, with enterprises in some regions and sectors struggling whilst, in others, growth forecasts are hitting 12 or 18-month peaks. Small businesses that rely on seasonal peak periods are leading the sector’s growth forecasts.

Seasonality can be a blessing and a curse for small businesses, given these enterprises depend more heavily on shorter peak periods for trading. When market conditions favour them, things can go well but disruption from challenges like the pandemic, interest rate rises and extreme weather can hit them hard. It is pleasing to note from our latest study that seasonal small businesses out-strip the national average in predicting growth for the summer period. Some seasonal businesses - for example, those in hospitality, agriculture, tourism or food production - have obvious summer peak periods but seasonality can apply to businesses in many other sectors, based on their customer profile and service offering.

Among the UK Small business community, around 40% of enterprises class themselves as seasonal businesses, which is why we at Novuna Business Finance take the time to understand their specific needs and support them with tailored funding solutions.

Jo Morris

Head of Insight

Novuna Business Finance

Note to editors

The research was conducted by YouGov among a representative sample of 1,103 small business decision makers between 19 June and 2 July 2023, spanning all key industry sectors.

Percentage of small businesses predicting growth by company age

 

2023

Q3

2023

Q2

2023

Q1

2022

Q4

2022 Q3

2022

Q2

2022

Q1

Up to 5 years trading

51%

42%

44%

44%

43%

46%

42%

Trading for more than 20 years

24%

30%

28%

26%

27%

30%

30%


Percentage of small businesses predicting growth each quarter by sector

2023

Q3

2023

Q2

2023

Q1

2022

Q4

2022 Q3

2022

Q2

2022

Q1

Manufacturing

32%

34%

44%

35%

34%

40%

46%

Construction

24%

31%

25%

27%

18%

35%

38%

Retail

27%

31%

28%

28%

20%

25%

23%

Finance & Accounting

40%

46%

41%

40%

44%

39%

35%

Hospitality

34%

38%

24%

26%

31%

41%

29%

IT / Telecoms

35%

44%

42%

40%

44%

40%

40%

Media

36%

38%

45%

48%

36%

38%

52%

Transport

35%

25%

23%

24%

30%

31%

27%

Real Estate

24%

15%

29%

27%

32%

29%

36%

Agriculture

31%

30%

34%

11%

25%

25%

23%


Percentage of small businesses predicting growth each quarter by region

2023

Q3

2023

Q2

2023

Q1

2022

Q4

2022 Q3

2022

Q2

2022

Q1

North East

35%

29%

29%

32%

33%

41%

44%

North West

24%

31%

35%

23%

33%

33%

28%

Yorkshire / Humber

25%

27%

24%

26%

39%

34%

39%

East Midlands

28%

34%

30%

35%

26%

40%

30%

West Midlands

38%

27%

34%

30%

35%

36%

33%

East

32%

33%

25%

29%

36%

40%

44%

London

39%

38%

42%

41%

42%

49%

46%

South East

31%

32%

31%

31%

27%

31%

27%

South West

32%

33%

29%

26%

34%

32%

32%

Wales

27%

28%

30%

22%

29%

33%

27%

Scotland

35%

28%

29%

29%

33%

27%

20%