UK tech firms estimated to grow four times faster than 2015 GDP
Tech businesses even more confident for 2016, expecting average growth to hit 15%
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%.
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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.”