South West tech firms are poised to grow at four times the rate of the economy this year, according to new research.
Some 58% of the firms quizzed as part of Barclays’ Fast Growth Tech survey said they expect their business to grow by up to 10%, with 19% forecasting growth of between 10% and 20% and 11% looking at above 20%.
With most economic commentators predicting GDP growth this year of 2.6%, the survey results show the continued rapid growth of a sector in which Bristol is a major player and which can have a major impact on the city’s wider economy.
The research, independently commissioned by Barclays’ Technology, Media and Telecoms, was conducted among owners and CEOs of tech firms. 
They were even more positive about the outlook for next year, with the average firm expecting 13% growth compared to this year and 14% predicting their growth to top 20%.
Barclays Corporate Banking’s corporate director for Bristol, David Goodall, pictured, said: “These remarkable growth predictions reveal the optimism and drive of the tech sector in the South West.
“The fact that many firms are expecting further growth in 2016 shows that this trend isn’t transient and the South West 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.”
The research comes a week after the Bristol and Bath area was named as the UK’s most important centre for the fast-growing digital industry outside of London with a globally-significant cluster of innovative businesses.
The Barclays research showed that investment in new technology (83%) and strong leadership (67%) were at the heart of tech firms’ growth in 2014. In terms of what was likely to be important for sustaining or accelerating growth over the next twelve months, businesses placed particular emphasis on improving customer service and exporting to new markets.
When considering the challenges facing the business in 2015, the ability to attract and retain talent (33%) and increased competition (28%) and were the most pressing concerns for South West business chiefs.
Some 53% stated that the Government provided support to enable them to grow. When asked about the financial challenges the business would face in 2015, tighter margins (25%) was the biggest concern for respondents overall.
David continued: “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.”
The research revealed that the fastest-growing firms with the lowest turnover of those surveyed (£3m-£5m) have their own distinct characteristics, which differed to businesses with more modest growth.
Differences between small, fast growth (>20% growth) vs. standard growth firms (<10% growth):
- 93% cited strong leadership as a key catalyst for their firm’s growth in 2014 (vs. 73%)
- 84% said investment in new technology or equipment increased their growth (vs. 67%)
- 80% placed importance on the speed of decision making as a growth enabler (vs. 54%)
- 84% believed maintaining investment in their workforce helped to speed their growth (vs. 54%)
- 30% said the ability to attract and retain talent was a key challenge (vs. 17%)
- 77% want to progressively grow their business (vs. 63%), while only 5% want to maximise the value of the business in order to sell it (vs. 18%)
- 82% said the success of their business is down to careful strategic planning (vs. 75%)
- 14% expect growth of between 21-50% in 2015 (vs. 1%)
Another key difference distinguishing small, fast-growing businesses from their standard growth peers is their heightened focus on reviewing their tax positions for growth – 62% agreed this was important, versus 31%. This could reflect their level of awareness and appetite for attractive Government tax benefit schemes, such as Patent Box.
