Entrepreneurs expect improved profitability

Britain's entrepreneurs remain optimistic even as evidence of a slowdown mounts, a survey reveals.

Almost half of self-starters believe the UK's economic climate will improve in the coming year, and most expect profits at their business to increase, a study by Investec Bank suggests. Two out of five entrepreneurs expect to launch a new company or product in the UK over the next 12 months.

Some 86 per cent of those interviewed expect the profitability of their UK business operations to increase over the next 12 months, with 26 per cent expecting a dramatic rise. Two thirds expect their overall cash flow to improve. However, they are less optimistic than they were six months ago, when 56 per cent expected the UK economy to get better.

But high risks to success identified by those surveyed included falling customer demand, government spending cuts, exchange rate volatility and the effects of the VAT increase. One third saw the government spending cuts as a problem.

Ed Cottrell, of Investec, commented: "The findings from our index are encouraging, because much of the economic growth we are all hoping for will come from successful entrepreneurs.

"Many clearly feel optimistic about the future, and our findings reveal that 42 per cent say it is very likely that they will launch new companies and products in the UK over the next 12 months, compared to 26 per cent who said this in December 2009.

"Given these growth plans, many of these entrepreneurs will hopefully pick up some of the job losses in the public sector."

Two thirds of the 50 entrepreneurs surveyed plan to hire.