More than eight in 10 (82%) entrepreneurs think their businesses will grow by at least 10% over the next year, according to a new report from Deloitte, the business advisory firm. This is the most optimistic growth prediction since Deloitte began surveying entrepreneurs in 2008, when 67% predicted the same growth. One fifth (18%) of entrepreneurs this year expect to see growth of more than 50%.
Entrepreneurs’ optimism at six year high
After years of saving cash and waiting for the recovery to fully take root, this year 56% of entrepreneurs said they will use their cash reserves to finance growth. In fact, just 15% are actively stockpiling, compared to last year when 32% were doing so.
Another encouraging sign is that nearly a third (29%) of entrepreneurs say they are taking the bold steps of investing in new products and exporting to new markets as their primary growth strategy. Around half (49%) of companies will use organic growth as their main growth strategy.
Richard Crane, head of Entrepreneurial Business at Deloitte in Cambridge, said: “This reflects a strong previous 12 months for entrepreneurs, where 83% experienced a growth in turnover and 14% saw growth of more than 50%. In a further sign of optimism, just 5% expect their turnover to fall over the next year and 88% expect the economy to grow by up to 2%.”
However, when it comes to funding growth plans it appears that most entrepreneurs remain reliant on working capital. Just one fifth (19%) think that banks are more willing to lend now than they were last year, while only 10% expect to take out a bank loan and just 7% will use an overdraft facility.
Crane commented: “Banks may have funds available to lend to businesses, and they may be loosening the criteria by which they spend, but it seems entrepreneurs are still unwilling to borrow from them. This is bad not just for entrepreneurs, but also for the banks, so it is important that this relationship is mended.”
Entrepreneurs are optimistic and the green shoots of recovery are visible, but small business owners still need help from the Government on a range of issues.
Crane concluded: “It is still costly to employ people, despite a recent tax break, and there are also visa restrictions which can make recruiting skilled people from overseas difficult. The Government has shown signs of support but more can be done to encourage job creation. Further, while companies can grow by targeting opportunities in emerging markets, nearly one third of companies (31%) said the biggest barrier to making it happen was a lack of knowledge, so it is clear that businesses need more help.”
The most important foreign market for entrepreneurs was Western Europe, with 45% saying it was a major export destination. When asked about the debate over the UK leaving the European Union, 52% thought it would have a negative impact on their business and just 7% thought they would see a benefit.
The Deloitte Cambridge office comprises 8 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business, food and agribusiness.