Business leaders in the UK’s mid-sized companies have even more confidence in the economy and their own business growth in 2014 than their American, German, Japanese and Australian counterparts, according to a recent international survey conducted by American Express.
According to the inaugural American Express survey of mid-sized companies, conducted in June among businesses with annual revenues of £3-600 million, 48% of the UK’s mid-sized companies anticipate even further business growth in 2014 as a result of the significant upturn in the economy. While UK respondents were the most optimistic, the survey reports that the majority of their international counterparts are bathing in the same warm economic glow, with Germany and the US amongst the most bullish about growth prospects for their companies for the remainder of the year.
In the UK, the positive outlook was coupled with many concrete examples of success: 66% said revenue has increased versus last year, and 62% said their company has more employees than a year ago – more than any other country surveyed, with a staggering 83% of UK respondents planning to increase headcount further this year.
Better rate of growth
The single most important priority for nearly half (49%) of UK companies over the next six months is business growth. In their quest for growth, companies in the UK are poised to open their purse strings to aid expansion. UK companies have clearly placed investments in expanding their customer base as critical to their growth trajectory: 34% are prioritising new customer acquisition and a further 16% plan to prioritise investments in customer retention and growth. Other spending plans are similarly focused on accessing new customer channels:
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- 29% plan to introduce new products and services in the next six months and 25% plan to enter new customer segments
- UK companies have their sights firmly set on leveraging the international marketplace, with 64% planning to tap international markets as a means of acquiring new customers (with the three most popular targets being the US, China, and India)
However, while 55% of all countries surveyed within the poll said they already operated in Europe, only 4% said they wanted to specifically expand into the UK, suggesting that while British businesses are booming abroad, other countries currently show less of a marked interest in the UK as an international export market with potential for growth.
“This survey clearly sees a return to prosperity for UK companies and the economy. The mid-sized company sector is the engine room of Britain’s economy, and its resounding commitment to invest to fuel further growth this year is another in a long series of good news headlines for UK PLC,” said Brendan Walsh, Executive Vice President, Global Corporate Payments, American Express.
Capital and cash flow concerns
More than eight out of ten (82%) of British respondents surveyed said they were confident that they could access the capital necessary to grow their business, but a significant note of caution has been revealed by the survey data, with 86% of the UK mid-sized companies anticipating they would experience cash flow issues in the next six months. This suggests a divide between access to growth capital, and access to working capital.
When surveyed further on financial management processes, the data revealed that most companies have a centralised expense / accounting management system in place (63%), with all of the respondents (100%) declaring themselves either ‘very’ or ‘somewhat’ “satisfied” with the process. In spite of this seemingly rosy picture, 27% admitted to the fact that cash flow concerns are keeping them up at night, and 25% said that over the next six months managing cash flow and capital would be their organisation’s number one priority. Other cash flow concerns identified by the poll included: having enough cash on hand to win new business (23%); the ability to accurately track cash flow both into and out of the business (23%); collecting on accounts receivable (21%); the ability to pay bills on time (10%) and the ability to meet payroll (10%).
On the findings, Brendan Walsh, Executive Vice-President and General Manager, American Express, concluded: “While cash flow restrictions typified by the recession have eroded, it appears that this sweet spot may not last forever, with the vast majority of UK companies anticipating they will encounter cash flow issues by the end of the year. The good news is that the financial discipline of the recession years has clearly left an indelible mark, with UK companies placing considerable focus on optimising their own cash flow management so that growth can continue unabated.”
Snapshot of Six Additional Survey Markets – In addition to the UK, the American Express® Survey of mid-sized companies was conducted in six other countries. Click here to download additional survey findings.