Over half of owner managed businesses in the UK believe their “best days are ahead of them” helped by an improving economy and the prospect of less government regulation.
In its second annual survey of over 300 businesses across the UK, Allied Irish Bank (GB) found that owner managers were much more optimistic about their prospects than they were a year ago.
More than six in ten, 62 per cent, said they expected the economic situation to improve in the next year with 90 per cent optimistic about future business prospects.
One in three, 33 per cent, said they were currently in a growth phase – which is three per cent better than 12 months ago – and 60 per cent said that the “best days for their businesses lie ahead”.
Almost half expected an uptick in cash reserves and there was also a marked increase in those prioritising a capital raise with 45 per cent seeing it as likely next year, up from 33 per cent last time.
The survey found that sources of funding for this capital are becoming more diverse with bank funding still the key component but crowdfunding also on the rise.
The AIB said this suggested that the “SME lending business is experiencing a period of disruption and that OMBs want traditional banks to work in conjunction with newer lenders to help facilitate growth”.
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Larger businesses, those with a turnover of £51m to £100m, were the most bullish with 81 per cent who declared themselves as optimistic.
More businesses in the North of England and Scotland said they expected to increase headcount over the next 12 months but only 16 per cent of OMBs in Scotland felt that the government is doing enough to support them, with a national average of 42 per cent.
AIB found that one of the main drivers behind the overall positivity was the definitive general election result in May which had created certainty and eased concerns.
Fewer OMBs now see government regulation as a threat, falling from 48 per cent last year to 39 per cent this time.
However, OMBs do see some hurdles ahead with a fifth rating Euro zone instability as the biggest issue facing the UK economy, and one in ten who stated that the upcoming referendum on UK membership in the EU was the biggest risk.
Gerard O’Keeffe, head of Allied Irish Bank (GB), said: “Owner managers are much more confident about the future of their businesses and more optimistic about the broader economic outlook. This is great news for Britain. There is still cause for caution.
“Ongoing market instability in Asia will combine with concerns about the future of the euro zone – meaning that owner managers need to carefully balance the risks and rewards before making a decision about whether to invest for growth.
“But our research shows that owner managers are often hesitant, delaying investment until they are really sure the economy is growing strongly. This can be a drag on growth at a time when we need every part of the economy to be firing on all cylinders.”
Jacqueline O’Donovan, managing director of O’Donovan Waste Disposal Limited, a business based in North London that employs more than 100 staff, offered her thoughts.
“We are seeing an improving economy in our finances, as well as sensing it in the conversations that we’re having with customers, colleagues and other local businesses,” she explained.
“The definitive general election result has given us much more certainty, although we are still vigilant about the risks. We’ve been closely monitoring developments in the euro zone, and what’s going on in Asia is also cause for concern. All in all as things stand we remain positive.”
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