Coutts Entrepreneurs Research: Part Two - Investment
Our analysis of the first section of our research of almost 300 entrepreneurs asked the question: are entrepreneurs more pessimistic than we think?
This was sparked by our survey probing their attitudes and strategies at a time of massive domestic change – almost half of respondents said they had concern for their industries.
But when we looked further into it, we felt that it was more nuanced than the question suggests; having concern for an industry is not equivalent to being pessimistic about its future.
“I see investment interest in the UK increasing”
Two-thirds (67%) of our entrepreneurs either see investment into the UK being maintained in the next 12 months or even increasing. Almost one-in-five (18%) felt strongly that the outlook looks very bright, versus just 3% who firmly disagreed that investment would increase.
We don’t know what the UK’s political situation will be regarding Brexit over the next six months, and yet entrepreneurs remain bullish about the country’s ability to attract investors.
This confidence is not unfounded because, over the past three-and-a-half-years of sustained political uncertainty, investment in the UK has continually increased. Between 2010 and 2018, the value of inward foreign direct investment (FDI) in the UK has risen by 77%, according to the United Nations Conference on Trade and Development, totalling $1.89 trillion at the end of 2018 - $541 billion higher than Europe’s second largest destination for FDI, Germany.
With the Brexit process likely to draw to a close in the coming months, certainty either way should be good for investment. Many investors were expected to have been more cautious about putting their money into the country since 2016, but in fact helped increase FDI into the UK by 20% since 2016.
“I am interested in reinvesting in other industries to safeguard the future of my company”
Many clients in our entrepreneur network are investors as well as founders and are looking to acquire new businesses to help safeguard their existing interests.
More than a third (35%) of respondents to the survey are looking to do this by branching out into other industries. They see opportunities in new areas and, as natural risk-takers, are willing to try something different.
This is particularly pertinent when we think back to the fact that 62% of our respondents agree that their industry is ripe for disruption: entrepreneurs are the disruptors of each others’ industries.
But we should also note that more than half of entrepreneurs in our research are not looking at reinvesting in new industries, but are instead using their expertise to improve the services they already provide and contribute to their existing sectors. It is seemingly geographical expansion that interests them more, and that’s what the next part of our research is focusing on.
When investing, past performance should not be taken as a guide to future performance. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.
Coutts research finds that most entrepreneurs are positive about investment into the UK over the next 12 months.
This confidence is not unfounded. Over the past three-and-a-half-years of sustained political uncertainty, investment in the UK has continually increased, according to the United Nations Conference on Trade and Development.
Many survey respondents also said they were looking to acquire new businesses to help safeguard their existing interests.