§ Financial and business services companies expect to grow by more than double (108%) in next five years
§ Over a third (34%) consider growing their business organically an immediate short-term priority
Financial and business services companies are showing confidence about their long-term growth prospects in spite of the current economic climate. Directors of companies with annual revenues of up to £20million are expecting, on average, to increase their turnover by 108% in the next five years, according to research from Santander Corporate Banking*.
In an encouraging sign for the sector, nearly as many directors (34%) highlighted the active pursuit of growth as an immediate short-term priority for their business as those who are focused on survival (35%). Furthermore, one in seven (15%) directors say their business has never been in better shape. However, while the sector is increasingly focusing on growth, many companies are still looking to cut costs, with 27% identifying this as an immediate priority.
Nationwide, smaller companies are, not surprisingly, most optimistic about their growth prospects with the average company with a turnover of less than £500,000 expecting to grow their business three-fold (by 202%) over the next five years. However, larger companies also have ambitious expansion plans, with businesses turning over between £5million and £20million expecting to grow by an average of 86%.
Businesses in Scotland and Northern Ireland are most optimistic about their growth prospects over the next five years, expecting to grow by 194% on average. Businesses in the South East (136%) and South Wales and the South West (123%) also show strong levels of optimism. However, businesses in the North West, West Midlands and North Wales are less optimistic, expecting to grow by around 50% over the same period.
Yet despite the general optimism, financial and business service providers say the tough trading environment represents the biggest challenge, cited by over a third (38%) of directors as preventing them from growing.
Steve Pateman, Head of Santander Corporate and Business Banking, said:“Many businesses clearly remain cautious in the current tough trading environment but it’s encouraging to see that in the longer-term they are very positive about their prospects.
“The country is reliant on these businesses to drive the economic recovery and it bodes well that they are confident in their growth potential. At Santander, we are committed to supporting ambitious companies break through the challenges and barriers they face, helping them to fulfil their growth ambitions.”
High growth sectors
Manufacturers are most optimistic about their prospects, expecting to grow by an average of 138% in the next five years. Financial services (108%), wholesalers (85%) and construction companies (74%) follow while retailers remain relatively cautious expecting to grow by 52% over the period.
Sector
|
Average expected company growth over next five years
|
Manufacturing
|
138%
|
Financial/property/business services
|
108%
|
Wholesale
|
85%
|
Construction
|
74%
|
Retail
|
52%
|
Other
|
125%
|
UK total
|
104%
|
|