Growth will take a backseat to survival for the UK’s entrepreneurs this year, according to the results of Deloitte’s annual Entrepreneurship UK report.
Entrepreneurs fighting for survival
The survey of nearly 300 entrepreneurs from across the UK revealed 20 per cent of firms expect to see no revenue growth in their business in 2009, compared to seven per cent in 2008.
The survey also found that nearly 25 per cent of businesses believe they could cut back on salaries and bonuses.
Colin Hailey, associate partner in entrepreneurial business practice at Deloitte in Cambridge, said: “We are in the midst of exceptional times and the recession has exposed just how much room for improvement there is in many businesses.
“Two-thirds of entrepreneurs claim they have identified areas of potential cost-cutting, yet have not actually gone on to make the required cuts.
“At the same time, just 39 per cent say they know their competitors well and two out of five admit they could do more to improve the quality of their products or services.
“When a recovery appears, the economic environment may be radically different to the past. To stand out from the crowd, entrepreneurs need to make some tough decisions now to be on the front foot when market conditions do recover.
“The opportunity is ripe not just to cut, but to replace one cost with another that is more productive. But many businesses are not cutting costs, limiting their chances of increasing revenues because they are not making improvements.”
In particular, foreign expansion into potentially untapped markets has rapidly slipped down the list of priorities as entrepreneurs take a more cautious stance, avoiding potentially costly drains on company resources in turbulent markets. Indeed, nearly two-thirds (62 per cent) of companies say the UK offers them the best opportunity for growth in the next three years.
The case is somewhat different for Cambridge based entrepreneur Mark Shields who runs the global carbon software company Credit360.
The business is driven by demand for sustainable, low carbon solutions, often prompted by government legislation in countries around the world.
“For us the UK market is no different to continental Europe, Australia or the US,” said Mr Shields.
“As an IT company working with leading businesses to measure and manage sustainability performance and carbon footprints, we’re seeing more investment to improve performance in these areas and to achieve the associated savings.
“We have also benefited from the impact of President Obama’s carbon agenda in the US and similar legislation in Australia and the UK, which is driving the market forward and helping us to buck the trend.
“As well as our headquarters in Cambridge and our North American office in Chicago, we have opened offices in Australia and South Africa this year and we have seen growth of 40 per cent.
“We did see a dip 12 months ago when companies were holding onto budgets but these have been freed up again now and we hope to see further growth throughout the remainder of this financial year.”
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.