Bowmark Entrepreneurs’ Index shows sharp fall in optimism
by SMEs
Released
on: July 14, 2008, 7:16 am
Press
Release Author: Caroline
Cecil Associates
Industry:
Financial
Press
Release Summary: The latest Bowmark Entrepreneurs’ Index,
a survey of UK small and medium-sized businesses, shows that their
mood has become distinctly gloomy in the past six months
Press
Release Body: The Bowmark Optimism Index, which
tracks how positive directors of small and medium-sized businesses
are about their own operations, has dropped nearly 10 points to
66.7 since the first survey was published in January. Their view
of prospects for their own industries and UK entrepreneurial companies
generally is even grimmer.
Other
survey highlights
-
|
companies
have become more concerned about the impact of government
intervention and legislation on their businesses - 70% cited
these as obstacles to growth, up from 56% in January, while
nearly two-thirds see tax as a major obstacle; |
-
|
profit
and revenue growth have slowed; |
-
|
rising
energy prices have had a negative impact on a third of companies
surveyed; |
-
|
the
credit crunch is starting to bite - around a quarter of
companies said that the availability and terms of bank debt
have worsened since the previous survey. |
The
Bowmark Entrepreneurs’ Index is a survey of the
directors of small to medium-sized businesses in the UK commissioned
by Bowmark
Capital, the mid-market private equity firm.
Growing
unease about the outlook for the UK economy has severely dampened
the positive mood of entrepreneurial companies six months ago.
While the Optimism Index measuring their attitude to their own
businesses has dropped nearly 10 points to 66.7, their view on
prospects for their industries is even gloomier - down nearly
17 points to just above 50. Their optimism about UK entrepreneurial
businesses generally has tumbled 13 points to 49.7.
Growth
in turnover and profits has slowed since the last survey. In January,
more than 60% of respondents reported profits up 10% or more in
the previous 12 months. This time, fewer than half saw that level
of increase and a quarter had stagnant or falling profits. The
percentage reporting a more than 10% growth in revenue fell from
65% in January to 57% in this survey.
Companies
have also reined in their expectations for future growth. Just
over half of those surveyed expect a 10%+ growth in revenue in
the next 12 months, down from two-thirds in January’s report.
Similarly only half are anticipating a rise of more than 10% in
profits, down from 70% last time.
Only
a third of respondents are planning acquisitions in the year ahead,
compared to 43% in January, while two-thirds this time are planning
to launch a new product or service.
Employment
prospects have also worsened. Two-thirds increased their employee
numbers by less than 10%, remained static or cut jobs in the past
12 months, up from 55% of respondents in the last survey.
Looking
at the year ahead, nearly three-quarters expect to expand their
workforce by less than 10%, against just 55% in January.
Obstacles
to growth have become more onerous in the past six months, especially
legislation and government intervention and taxes. 70% of respondents
(up from 56% last time) cited government initiatives as obstacles
to growth. Two-thirds rank skills shortages as a burden (unchanged
from last time) but taxes have become a bigger obstacle to growth
this time - nearly two-thirds said taxes were a burden, against
43% in January.
The
credit crunch has started to have an impact on the terms banks
charge for debt. Some 29% of respondents said the terms they were
offered for acquisition finance had worsened while just over a
quarter experienced tighter terms for working capital and investment
in fixed assets. However, most companies seem to have a strong
financial base - 98% were having no problems servicing their debt.
Respondents
are investing in “green” initiatives in spite of economic
pressures. Nearly three-quarters have already installed recycling
schemes. 70% already have, or will, implement employee education
schemes and energy saving measures in the next six months.
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End -
About
Bowmark Capital:
Bowmark Capital is a leading private
equity firm specialising in smaller UK companies. Founded
in 1997, Bowmark manages and advises equity
funds totalling approximately £700 million on behalf
of a blue chip
investor base including public pension funds, insurance companies
and banks from the UK, US and Continental Europe.
Web
Site: http://www.carolinececil.co.uk/
For
further information, please contact: : Caroline Cecil
Caroline Cecil Associates
30 Poplar Grove
London
W6 7RE
020 7610 4110