By Daniel Hunter
The latest findings from the Investec Entrepreneur Confidence Index, which tracks the confidence levels of leading UK mid-market entrepreneurs, reveals that only 13% expect the country’s economic climate to improve over the next 12 months.
Over a third (39%) expect a slight deterioration, and one in ten expect conditions to worsen considerably. This is the lowest level of optimism recorded by the index since it was launched in December 2009. Then, when asked about their prediction for the UK economy in 2010, 64% of entrepreneurs felt conditions would improve, and just 18% said they would deteriorate.
The latest findings from the Index are based on the views of 31 of the country’s leading entrepreneurs. Their businesses have a combined annual turnover of £1.3 billion or £42 million each.
Despite their concerns about the UK economy, this group of successful mid-market entrepreneurs are hopeful about their own enterprises. All of those interviewed expect their revenue to grow this year, with nearly one in five (19%) anticipating growth of over 20%.
More importantly, 86% of those interviewed said that they expect the profitability of their UK businesses to grow during 2012, with one in four believing they will see significant growth here.
“The ‘Entrepreneurial class’ are often naturally optimistic, so we are not particularly surprised that despite them anticipating a decline in the UK economy, many have high hopes for their own businesses, and perhaps see opportunities in the current climate," Ed Cottrell, Investec said.
"Indeed, half of those entrepreneurs interviewed said that they were planning to make at least one small acquisition this year. Some 84% said that they were going to focus on growing their businesses organically.
"This helps explain why 56% of entrepreneurs plan to increase spend on research and development and only 15% anticipate making cuts here.”
In terms of launching new companies or products this year, 58% of entrepreneurs interviewed said that it was ‘very likely’ that they would do this and 29% said that it was ‘quite likely’.
The overall level of optimism leading entrepreneurs have about their own enterprises is good news for job creation. 63% of the entrepreneurs interviewed said that they plan to increase the number of people they employ this year, and only 13% said that they planned to reduce their headcount.
Potential risks remain
When asked what the main risks facing their businesses are over the next 12 months, the biggest was the Eurozone crisis — 45% of entrepreneurs interviewed see this as a ‘high’ risk. This is followed by access to capital, where 34% see this as a high risk.
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