A survey by Barclays has revealed that UK technology companies are set to grow four times faster than the UK GDP (Gross Domestic Product) in 2015.
The independent research, commissioned by the tech, media and telecoms team at Barclays, found that CEOs and owners of UK tech firms expected their business to grow by 11 percent this year, some 8.4 percent more than the UK GDP of 2.6 percent. The GDP is used as an indicator for the strength of a country's overall economy.
Nine percent of firms predicted growth of over 20 percent for 2015, with this rising to 16 percent for 2016.
Sean Duffy, MD and head of Barclays’ technology, media and telecoms team, said: “These remarkable growth predictions reveal the optimism and drive of the UK’s world-leading tech sector.
“The fact that many firms are expecting further growth in 2016 shows that this trend isn’t transient and the UK is a real launch pad for innovative tech businesses. Investors are seeing the UK as an international talent magnet and a platform to grow or launch their business for a number of compelling reasons, including the culture, light-touch regulation, supportive government policies and access to finance.”
How tech companies grow fast
The research quizzed firms which have seen growth in the last year of up to 10 percent, 10-20 percent and over 20 percent.
The findings revealed that the fastest growing firms with the lowest turnover of those surveyed (£3-5 million) have their own distinct characteristics, which differed from businesses with more modest growth.
Four fifths (79 percent) of all the firms surveyed said that strong leadership was key to their growth in 2014.
In terms of what was likely to be important for sustaining or accelerating growth over the next 12 months, businesses placed particular emphasis on marketing and advertising, in addition to the strong leadership that has helped them achieve success to date. Some 73 percent also agreed that developing and protecting their IP was vital to the success of the business.
Barriers to growth
When considering the challenges facing the business in 2015, increased competition (29 percent) and the ability to attract and retain talent (25 percent) were the most pressing concerns for business chiefs.
Nearly half (46 percent) of all the tech businesses surveyed stated that the government provides sufficient support in enabling them to grow; this increased to 55 percent for small, fast growth firms.
When asked about the financial challenges the business would face in 2015 percent, increased costs (21 percent) and managing cashflow (19 percent) were the biggest concerns for respondents overall.
Duffy added: “Strong leadership rang out loud and clear as being critical for growth, and this is particularly important in the first few years of a business’ life. It’s also even more relevant for fast growth businesses, which experience unique stressors and demands on their cash flow, requiring their leaders to make many major decisions at speed in order to keep pace. It takes an extremely strong and dynamic individual to have a clear vision and the energy to lead their workforce to success in this type of supercharged environment.”