Businesses in the UK are gearing up for growth in 2018, despite looming economic uncertainties. According to a survey of 371 businesses completed by the EY Fast Growth Tracker, more than three-quarters of entrepreneurs are aiming to raise significant funds of up to £10 million each to support ambitious plans for growth. More than half aim for greater than 50 per cent growth in revenue in 2018.
This optimistic and growth-oriented attitude by business owners offers hope to a UK economy that is facing numerous challenges, from rate hikes to the threat of impending economic chaos as a result of Brexit. Even better, over 60 per cent of surveyed businesses are pursuing investors overseas, and strengthening the UK’s global business ties.
Entrepreneurs have big dreams for 2018
The Bank of England’s recent rate hike, along with ongoing confusion surrounding Brexit negotiations, have justifiably raised concerns among analysts and business leaders alike. Despite this, UK businesses have held firm, and their current outlook for the future reflects this.
Of businesses seeking investment, nearly three out of four are looking for £5 million in investment, while one in six are pursuing £10 million or more. The tech sector is leading the charge, with two-thirds of entrepreneurs expecting growth figures of over 50 per cent, compared to just over half of businesses surveyed as a whole.
Facilitating this kind of growth requires substantial financing, and we’ve discussed how flexible alternative financing solutions can be used to consolidate the working capital your business needs. Achieving rapid, large-scale growth like this, however, often means pursuing every possible avenue, including traditional equity financing.
Ambitious growth targets are good news for the UK
By indicating strong optimism and preparing for rapid growth in 2018, business owners are signalling to lenders, investors, and the government that UK businesses haven’t been intimidated by current events, and don’t intend to take a timid or conservative approach to dealing with them. This is a promising bit of news for UK consumers and investors who have been left feeling insecure over the lack of certainty in the past year, because this attitude among business owners alone provides some protection against any oncoming economic instability in its own right.
Courting new investment and pushing for growth means that businesses increase spending, creating new jobs and accelerating the velocity of money in the UK economy in the process. That means better financial stability for workers, and improved consumer confidence. Strong consumer confidence, in turn, will help to keep both domestic and foreign investors focused on the UK.
Domestic investment isn’t enough
Of the businesses surveyed, half reported that the biggest constraint on their growth was capital rather than other factors, such as demand or the availability of qualified labour. While over 60 per cent completed a round of fundraising in the last year, many were unsatisfied and found the process distracting.
More than one third of businesses reported that they couldn’t find the investment they were looking for in their last round of fundraising. Over the past year, the pound sterling has taken a significant hit, leaving UK investors in a less than ideal position compared to their foreign counterparts, despite a well-performing UK economy. As a result, many businesses are broadening their search, with over 60% planning to seek financing internationally. Fortunately, the same issue that is limiting the growth of domestic investment from UK investors makes it an excellent time for UK businesses to seek international investment.
The UK economy is attractive for foreign investors
After the UK’s vote to leave the European Union, experts predicted a variety of undesirable scenarios for the UK economy, ranging from uncomfortable to downright apocalyptic. Contrary to expectations, however, the economy held steady, and direct foreign investment has actually risen significantly in the past year. Primarily, this can be traced back to the depreciation of the pound during this period.
Instead of driving investors away, the relatively steady and modest decline in the pound’s value has made it more rewarding than ever for foreign investors to work with UK businesses. A cheaper pound means foreign currencies can get more done and generate more returns compared to previous years.
This, taken together with the capital needs of UK businesses in the coming year, coincide to describe a promising and hopeful future in an otherwise uncertain business environment. In the absence of strong economic leadership by the British government, UK businesses are stepping up to take a measure of control of their own collective future.