A recent survey published by the ICAEW has thrown up some interesting statistics. As many of you who have been following my tweets will know, I have been highlighting the raft of some really good economic news of late.
The survey, measuring business confidence, operating capacity, gross margins and employee numbers has highlighted that private companies are performing or are expecting to perform at a far better level than public companies.
I have consistently said that it is the SME sector that is more likely to deliver economic recovery. This is because SME’s are more flexible in their decision making and their attitude to risk as well as being more innovative in the adoption and use of IT. Large corporate institutions tend to be too bedevilled with bureaucracy, political infighting and too concerned with “shareholder value” to take the risk taking actions that often exploit opportunities.
The survey has confirmed this analysis. Business confidence (or rather more likely a “feel good factor”) in the south east region (excluding London) has increased by over 30% in the last year with construction, IT and communications and business services sectors showing the best gains. The business services sector has led the way with most job creation numbers. Most encouragingly the rate of gross margin growth is outstripping sales growth.
So domestically, the SME sector in the south east region is doing really well and this survey backs up our own recent internal survey that highlighted that over the last 48 months our top entrepreneurial customers increased their combined turnover by 60%, their combined balance sheet worth by 164% and their combined EBITDA by 225%.
Clouds on the horizon? Europe, especially with Greece claiming that they need a third bail out – that should please Angela Merkel – and the BRIC economies which are showing signs of contraction, although I suspect that this will only be temporary.
Economic growth will come from the SME sector
I have consistently said that it is the SME sector that is more likely to deliver economic recovery. This is because SME’s are more flexible in their decision making and their attitude to risk as well as being more innovative in the adoption and use of IT.