Investment in new equipment is rising, according to a survey of UK small business finance chiefs.
An overwhelming majority of finance heads at UK small and medium sized businesses (SMBs) are maintaining or increasing their investment in new equipment and machinery despite the recession, according to research.
The research was conducted by the Carbon Trust with over 200 SMB members of accountancy bodies CIMA and ACCA. It found that 75% of financial decision makers plan to increase or keep their investment in new equipment and machinery steady in the first six months of 2010. This represents a rise on the last six months of 2009, when 65% planned to increase or keep their investment steady.
The study suggests not only a resilient and rising appetite for investment among SMB finance chiefs, but also widespread awareness of the benefits of energy efficient equipment, and the cost burden of wasted energy.
- 81% believe that investing in energy efficient equipment gives firms a stronger competitive advantage.
- 24% see investment in energy efficient equipment as essential to their firm’s survival this year.
- 31% expect energy to be one of the top three costs to their business in 2010, alongside compliance (32%) and staff investment (50%)
The research was released as the Carbon Trust announced that its ‘Big business refit’ campaign has funded over £60m of energy efficiency equipment upgrades with interest free loans since April 2009. These loans have provided annual energy savings of £20m and 125,000 tonnes of CO2 a year.
Tom Delay, chief executive, the Carbon Trust, said: ‘The research shows a high understanding among finance directors that energy efficient equipment investments help control costs, boost productivity and make companies more competitive. I would urge them to look to our interest free loans as a cost effective way to realise their investment strategies.’
The research reveals that financial heads at SMBs have continued to look for opportunities to invest in their businesses despite the economic downturn. Only 6% said they are avoiding investment at all costs until things improve, whereas 62% said they have continued to seek out opportunities to invest and prepare their firms for the future. 27% said they are committing just enough to keep their businesses ticking over.
This contrasts with the more cautious picture presented by Carbon Trust research in September 2009, which found that 52% of procurement decision makers at SMBs planned to ‘make do and mend’ with old equipment rather than replacing it.
Ray Perry, executive director of brand, profile and marketing, CIMA said: ‘The survey shows that SMBs - now fire fighting less and looking to the long term - are keen to invest in energy saving equipment to gain a competitive edge. Management accountants have the ability to drive sustainable performance and embed it in corporate strategy. Reliable forms of alternative finance, such as the Carbon Trust loans, are key to making these initiatives a reality.’
Henning Drager, head of sustainability at ACCA, said: ‘The financial community understands that SMBs must avoid stagnation, and continue to look for new opportunities to invest. Practicing accountants especially are best placed to recognise low risk forms of finance, like interest-free loans, and recommend them to clients as part of a clear survival strategy.’
Yorkshire based, flexible packaging printer, Roberts Mart, funded new lighting, and drying and evaporation equipment, using interest free Carbon Trust loans totalling £300,000.
Ken Ellis, financial director, Roberts Mart’s, said: ‘Continued investment is crucial to the ethos of the company. But without access to interest free funding, we wouldn’t have been able to make a capital project of this size, even though the investment now saves over £100,000 a year on energy, as well as improving productivity.’
The ‘Big Business Refit’ programme offers interest free funding of between £3,000 and £500,000. Advice on identifying suitable energy efficiency capital projects is also available.
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