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Other survey highlights

  • many companies undertook considerable corporate development activity, such as launching new products or services, in the past year and these activities had a positive impact on performance;
  • skill shortages are seen as the biggest obstacle to growth with legislation and government intervention close behind;
  • dispiriting for the government, more than 80 per cent had not heard of the Enterprise Directorate, as the Small Business Service was re-named last July, and only 3 per cent felt it would mean a better deal for them; and
  • in spite of the recent negative media focus on private equity, half of respondents said the industry would help them deliver strong growth.

The Bowmark Entrepreneurs’ Index is a new survey commissioned by Bowmark Capital, a leading private equity firm specialising in smaller UK companies. This is the first of a series tracking the financial performance and levels of optimism of small and medium-sized companies about prospects for their own company, their sector and entrepreneurial businesses generally.

The survey also explores the type of development activity respondents have undertaken in the past 12 months and intend to take in the year ahead, and their attitude towards the challenges and opportunities faced by entrepreneurial businesses in the UK.

Although most (85 per cent) were optimistic about their own prospects, two-thirds of respondents were also positive about prospects for their sector and 58 per cent thought the future was bright for entrepreneurial companies in the UK generally.

Charles Ind, Managing Partner of Bowmark Capital, said: "You have to be a positive thinker to be a successful entrepreneur. But this survey demonstrates that many small and medium-sized businesses are delivering good results in spite of worsening economic and financial conditions and expect to do so in the future. Since our review, global uncertainty has increased significantly. Our next survey will reveal whether entrepreneurial businesses retain their optimism as conditions worsen."

The positive outlook of respondents mirrors good results for many companies in the past year. More than a third of companies surveyed increased both profits and revenue by more than 20 per cent in the past 12 months. Looking forward, more than two-thirds of respondents expect their revenue and profits will grow by at least 10 per cent in the year ahead.
Employment was another issue entirely. Over the past year, 55 per cent of the companies surveyed said they had either maintained or cut job numbers or had increased staffing levels by less than 10 per cent. In the coming year, only 18 per cent expect to increase their workforce by 20 per cent or more - virtually the same percentage which plans to cut jobs or maintain current levels of employment. Two-thirds of respondents said they found it difficult to recruit staff with the right skills for their business in spite of new government initiatives to encourage skills training.

Ind commented: "Whether the slow growth in past and planned employment arises out of problems finding people with the rightskills, or is down to increased productivity, will emerge in subsequent surveys."

Entrepreneurial companies surveyed were not just waiting for something to happen to help their company grow. Nearly three-quarters introduced a new service or product and 93 per cent of those said it had a positive impact on the business. Also deemed positive were opening premises in a new location in the UK (90 per cent) and overseas (88 per cent), and selling a business (84 per cent). Respondents plan substantially more development activity in the year ahead.

Respondents cited a number of obstacles to growth. While recruitment difficulties affected two-thirds of respondents, 56 per cent of those surveyed said government legislation, regulation or intervention made it difficult to grow their business. "The prospect of yet another consultation by government of how and where to cut red tape must make their hearts sink," said Ind.

Meanwhile even the smallest companies figured among the 82 per cent of respondents unaware that the Small Business Service had been renamed the Enterprise Directorate last summer. A government pledged to help growing businesses should note that only 3 per cent felt it would result in a better deal for entrepreneurial businesses.

Although the private equity sector has come in for criticism, 86 per cent of companies surveyed said their relationship with these investors was good; 71 per cent said they set realistic targets; and 58 per cent said they provided useful guidance on strategy.

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