Deloitte Entrepreneurship UK 2011 report shows optimism


In spite of the ongoing economic instability, the performance of the UK’s entrepreneurial businesses has remained positive in 2011 with 57% reporting revenue growth in line with, or out-performing, their projections for the year, according to the latest entrepreneurship survey by Deloitte, the business advisory firm.

  • 57% of the UK’s entrepreneurial businesses met revenue growth projections between 2010-2011
  • Over half forecast double-digit growth over the next 12 months
  •  13% of entrepreneurs are looking to grow their business in Asia, up from just 7% in 2010

While 37% saw their revenue fall below their ambitious forecasts, only 16% fell significantly short of their revenue targets.

Optimism remains strong among entrepreneurs: for a second year, nine out of 10 expect to grow their business over the coming 12 months. 53% forecast double-digit growth (2010: 56%) and 38% a maximum of 10% (2010: 36%). Just 8% project zero or negative growth. In the longer term, 90% forecast double-digit cumulative revenue growth for their business over the next three years, 38% are projecting growth to exceed 50%.

The appetite for mergers and acquisitions in order to grow the business is down to 4% (2010: 6%), and just 8% (2010: 11%) are considering entering into a strategic alliance or collaborative project. A third of entrepreneurs (34%; 2010: 25%) say organic growth will be their main growth strategy over the next 12 months, a fifth (21%; 22%: 2010) indicate development of new products and/or services.

The survey of nearly 500 entrepreneurs from across the UK identifies expanding into new markets (17%), introducing new products or services (17%) and increasing productivity (16%) as the three key business strategy priorities for entrepreneurs over the next 12 months.

Despite the continuing uncertainty, many entrepreneurs are broadening their business horizons and 15% say entry into new markets will be the main growth strategy. Whilst fewer are planning to expand their business within the UK (58%; 2010: 60%) and the US (11%; 2010: 13%), more entrepreneurs are looking to expand into Asia (13%; 2010: 7%) than the US. The UK remains the clear favourite in terms of new markets to enter, 5% now see China as their best opportunity for growth (2010: 2%) and 2% India (2010: <1%).

Richard Crane, head of entrepreneurial business at Deloitte in Cambridge, comments: “The rapid increase in GDP in the BRIC countries over the last decade, and the opening of those markets to foreign competitors, has enticed a number of entrepreneurs to focus on some of those countries. Asia, including China and India, is stirring the imagination of business owners with 13% of entrepreneurs looking to grow their business in the region, up from just 7% in 2010. However, not a single company in the survey believes Brazil represents its best growth opportunity and less than 1% Russia.

“This is a shift from last year where perceived challenges, additional costs and risks were discouraging entrepreneurs from entering the Asian market. There is now more trust and reliability in the region which, alongside growing economies and the difficulties facing the UK and western markets, has led to this change in attitude. However, it continues to be vital that all aspects of tax and regulation are considered. Exposure to additional unnecessary tax and penalties could easily happen, and missed reliefs may prove costly in the long term.”

In terms of development capital, over half (54%) of entrepreneurs will use cash generated from their business as the most likely source to grow, just a fifth will source it from a bank. 42% still describe their attitude to cash as ‘actively stockpiling’ and retaining cash within the business.

Additionally, six out of 10 say their bank has met most or all of their business needs over the last 12 months. A quarter say only some of their needs have been met, 12% have seen virtually none. The key area entrepreneurs would like their bank to be more helpful is in offering better lending terms. Almost half (48%) have experienced no change in their bank’s willingness to lend or improve their lending terms, less than a third (29%) have noticed a change.

Crane comments: “Ever since the credit crunch and the subsequent financial crisis reduced financial options for businesses, entrepreneurs have been waiting impatiently for lending conditions to improve. It is telling that a large proportion of entrepreneurial businesses are still stockpiling cash and nearly a quarter are saying they do not use bank financing for the growth of their business. As a group, entrepreneurs feel better served by banks than in the last few years, though frustrations remain for a large minority.”

When asked about Government-led resources, 30% of entrepreneurs are unfamiliar with the Enterprise Finance Guarantee Scheme (EFGS), 27% the Government’s Enterprise Zones and 30% StartUp Britain. In fact nearly half (44%) say they are not in the right region to benefit from the Enterprise Zones, however more Zones have been announced since the survey was conducted.

Crane says: “The Government has referenced the invaluable impact of entrepreneurial businesses to the economy on numerous occasions, introducing various schemes to kick start entrepreneurialism, growth and innovation around the country. However with awareness of these schemes far below where perhaps it should be, work needs to be done. Otherwise, from a business perspective, this looks like a missed opportunity for entrepreneurs to lean on the considerable pooled resources that only governments can call on.”


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.

Deloitte LLP