Entrepreneurs confident about investing in the UK, study shows

Written by Ray Clancy

Wednesday, 04 August 2010 09:22

Entrepreneurs regard the UK as a positive environment for investment and growth with many wanting to launch new businesses in the next 12 months, new research shows.

Some 57% of entrepreneurs are looking to secure capital in the UK primarily to fund organic growth, 50% need it to help secure acquisitions and only 11% require it to ensure their survival, a survey by Investec Private Banks reveals.

It also found that 70% of entrepreneurs have plans to launch new companies or products and 62% believe that the UK economic climate represents a business opportunity for them.

Also 72% expect their UK businesses to enjoy double digit revenue growth, with only 4% expecting a decline. Furthermore, one in three, 33%, says that it is very likely that they will launch a new company or products in the UK between June 2010 and May next year, with a further 37% saying that it is quite likely they will do this.

‘You look at the situation we’re in and see that there are a lot of opportunities to make investments. We’re at a turning point, which means that it’s a good time to take action,’ said Keith Curran, founder of Yes Telecom.

James Layfield, founder of Never Ever Limited and owner of the Lounge Group, added: ‘As an entrepreneur you will always find opportunities. We launched a business last year and will launch some more this year. When the economy is doing well anyone can make money. But if you are smart and can run a profitable business there are lots of opportunities at the moment.’

Bill Liao, author of Stone Soup and founder of weforest.com, said that as a business, if you have survived this long then it’s a great time to win market share if you can out compete your competitors. ‘Overall, I’m relatively optimistic about the UK and actually think it will provide some stability in Europe. I’m more worried about the Eurozone and what’s happening in Greece and Spain,’ he added.

‘I definitely think it is realistic to plan for acquisitions. There are many more opportunities at the moment to acquire businesses that are trading at relatively low levels and have low valuations. If you’re a proven business you shouldn’t have problems raising finance to acquire them,’ he said.

However, Keith Curran warned: ‘Normal high street banks are not making money available for acquisitions because their balance sheets are decimated. Their agenda is to get cash in rather than lend it out.’

Sally-Anne Ernst, founder of GreenTrac and Entinno and Global Research Chair of the Entrepreneurs’ Organisation said that access to credit is more difficult, but this is the new norm. ‘The message now is all about sustainability. What you need to concentrate on is business model, business model, business model,’ she said.

‘People with equity have an appetite to invest, particularly in interesting and unusual opportunities. At Investec, we can offer different sources of debt options for equity investors, such as asset based lending and mezzanine finance when traditional debt fails to deliver. This has certainly become more popular,’ said Ed Cottrell of Investec Specialist Private Bank.

‘We’ve seen some deals going for high prices, especially for brands with a high cachet, almost at 2007/2008 levels. Multiples are right on top, despite debt levels in these deals remaining at low levels. We’re finding that people are prepared to put debt into deals, though the way they are measuring risk is different to two years ago and multiples and amounts remain low,’ he added.