UK tech firms estimated to grow four times faster than 2015 GDP

According to research from Barclays’ Fast Growth Tech survey, UK tech businesses are set to grow four times faster than the nation’s GDP forecast for 2015.

The research – which questioned owners and CEOs of firms which have seen growth in the last year of up to 10%, 10-20% and over 20% – revealed they expected to grow by 11% on average this year, in contrast to the rest of the UK at 2.6%.

A more detailed analysis of the results showed 58% are expecting to grow by up to 10%, while 18% expect between 10-20% growth and a further 9% are predicting to grow by more than 20%.

When asked about predictions for 2016 businesses were even more positive, expecting on average 15% growth on 2015, and 16% of firms predicting growth to exceed 20%. The findings also revealed that the fastest growing firms with the lowest turnover had their own characteristics, in comparison to businesses with more modest growth.

Small, fast growth firms (>20% growth) cited the following as key factors for growth:

• Strong leadership (93%)
• Investment in technology or equipment (84%)
• Speed of decision making (80%)
• Investing in their workforce (84%), and
• Attracting and retaining talent (30%)

Meanwhile, for companies with less than 10% growth, the results were:

• Strong leadership (73%)
• Investment in technology or equipment (67%)
• Speed of decision making (54%)
• Investing in their workforce (54%), and
• Attracting and retaining talent (17 %)

Additionally, 77% vs. 63% wanted to progressively grow their business, while 5% vs. 18% wanted to maximise the value of the business in order to sell it. Finally, 82% of small, fast growth firms said success was down to careful strategic planning compared to 75% of standard growth businesses – and 14% expected growth of between 21-50% in contrast to just 1%.

Last year 79% of respondents asserted that strong leadership was the driving force for growth, whereas this year, particular emphasis is being placed on marketing and advertising in addition to strong leadership. A further 73% decided developing and protecting their IP was a determining factor in business success.

Increased competition (29%) and the ability to attract and retain talent (25%) were highlighted as the biggest challenges facing businesses in 2015, with increased costs (21%) and managing cashflow (19%) raised as the biggest financial concerns.

The survey also found 62% of small, fast growing businesses agreed that a heightened focus on reviewing their tax positions for growth was important, compared to just 31% of standard growth firms. Almost half (46%) of tech businesses stated the government provided sufficient support for growth, which increased to 55% for small, fast growth firms.

Sean Duffy, managing director and head of Barclays’ technology, media and telecoms team, said: “These remarkable growth predictions reveal the optimism and drive of the UK’s world-leading tech sector. The fact that many firms are expecting further growth in 2016 shows that this trend isn’t transient and the UK is a real launch pad for innovative tech businesses.

“Investors are seeing the UK as an international talent magnet and a platform to grow or launch their business for a number of compelling reasons, including the culture, light-touch regulation, supportive government policies and access to finance.”