UK Entrepreneurs Expect Economic Climate to Improve, But Risks Prevail
The Investec Entrepreneur Confidence Index, which tracks the confidence levels of entrepreneurs in the UK economy and their own enterprises, reveals that 46% expect the country’s economic climate to improve over the next 12 months. Only one in five (22%) expect it to deteriorate, with a third (32%) expecting no change in the overall economic outlook.
However, they are less optimistic than they were six months ago, when 56% expected the UK economy to improve.
The index’s findings reveal that only 4% of Britain’s most successful entrepreneurs anticipate that the revenue of their UK business operations will fall during the next 12 months, with nearly one in four (24%) expecting them to increase by over 20%.
Given this, it is not surprising that the index reveals that 86% of the successful entrepreneurs interviewed expect the profitability of their UK business operations to increase over the next 12 months (26% expect them to rise dramatically), while only 6% anticipate that they will fall. Two-thirds (66%) also expect their overall cash flow to improve, compared to 63% who said this in November 2010.
Ed Cottrell, head of the cash flow lending and intermediate capital team, Investec, said: “The findings are encouraging, because much of the economic growth we are all hoping for will come from successful entrepreneurs. Many clearly feel optimistic about the future, and our findings reveal that 42% say that it is very likely that they will launch new companies and products in the UK over the next 12 months, compared to 26% who said this in December 2009.
“Given these growth plans, many of these entrepreneurs will hopefully pick up some of the job losses in the public sector. Some 68% of successful entrepreneurs interviewed plan to increase the number of people they employ, while only 6% expect this to fall,” he added.
However, despite all of this optimism, there are still a number of risks that entrepreneurs remain worried about.
When asked what the main risks facing their businesses are over the next 12 months, the biggest was the impact of government spending cuts – 33% of entrepreneurs interviewed see this as a ‘high’ risk. Falling customer demand, where 30% see this as a high risk, follows this. One in 10 sees the VAT increase as a significant risk.