'˜Fast growing firms shrug off Brexit but are worried about the skills gap'
BRITAIN's fastest growing companies are shrugging off Brexit worries and expanding their business by targeting new markets in Europe and the US, according to a new study.
However, the survey from ECI Partners found that, despite record confidence levels, many companies are still complaining about a skills gap, which they blame on shortcomings in the education system.
Many of the respondents are also worried about a possible recession, as well as a poor outcome from the Brexit negotiations.
ECI’s annual survey, which is now in its eighth year, polled around 350 high-growth businesses - known as Gazelles - to find out their hopes and fears.
This year’s survey includes a section on how company culture and employee engagement can help to drive growth.
A spokesman said: “It is clear that there is a strong correlation between companies that create a positive culture to engage their workforce and growth.
Sir John Timpson, the chairman of Timpson, and writer of the foreword for the survey, advised managers to build “a company culture based on kindness that puts people first.”
Around 72 per cent of companies polled in Yorkshire and the North East are predicting double digit revenue growth this year, the highest confidence level since the survey started polling eight years ago. This strong performance appears to have been driven by the cheap pound, which is boosting exports.
Around 91 per cent of the fast growing firms in Yorkshire and the North East who were quizzed as part of the survey said they wanted to grow organically or domestically, which is the second highest percentage after the South East.
However, only nine per cent plan to increase hiring or investment, which is the lowest percentage among all the regions.
The study also found that companies in Yorkshire and the North East are the most concerned about the consequences of an economic downturn.
The spokesman said: “They are much more fearful of that than a rise in borrowing costs, or a bad Brexit deal.”
A spokesman added: “This year’s survey demonstrates the overwhelming optimism and resilience amongst high-growth businesses, with half of respondents expecting to grow their revenues by 20 per cent or more. This is significantly up on last year and marks the highest ever reading since ECI began polling companies in 2010.”
A cheap pound is turbo-charging exports, according to ECI’s analysis, with seven in 10 companies looking to sell overseas, which is the highest percentage in five years.
Peter Liney, the chief executive of the York-based travel company Great Rail Journeys, who contributed to the survey, said: “We’re in one of the great rail centres of Britain, and it’s a powerful association. We’re now targeting customers all over the world, and we’re winning lots of business in America and Australia.”
The vast majority of the survey’s respondents believe that a strong company culture and employee engagement are essential to the success of their organisation. Companies said it helps them to retain staff, improve customer experience, and most importantly for the UK economy, boost productivity.
Caroline Dent, a partner in ECI’s commercial team, said: “Financial success and strong culture are not mutually exclusive – they go hand in hand.”
Access to finance, a perennial complaint from high-growth businesses, has sharply improved on last year, with companies increasingly looking to use bank debt and private equity when seeking external capital, the survey found.
The ECI spokesman added: “High-growth businesses may be benefitting from a cheap pound, but they are concerned about the longer term impact of Brexit: they want more clarity from the Government on what will come out of the EU negotiations and that the economy won’t be trashed in the process.
“Almost two thirds of companies fear a recession in the UK, and a quarter are concerned that EU trade negotiations will go against them.”
High-growth companies continue to be plagued with skills shortages: while some say the Brexit vote has made it harder to attract EU workers, most blame the UK education system for the skills gap.
The spokesman added: “Respondents say that schools tend to put off young people from entering their industry or produce students with poor skills.”