Entrepreneurs’ optimism at six year high as they plan for growth has been saved
Entrepreneurs’ optimism at six year high as they plan for growth
7 October 2013
- 82% expect to grow by at least 10%
- 83% have increased turnover in last year
- Just one fifth think banks are more willing to lend
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. 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%.
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.
Mark Doleman, head of entrepreneurial business at Deloitte, 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.
Doleman 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.
Doleman 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.
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.
“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.” - Mark Doleman, Head of Entrepreneurial Business at Deloitte