South: Technology companies face growth concerns

The biggest issue currently facing the fastest-growing technology companies is not the credit crunch (as might be expected) but sales growth, according to new research from BDO Stoy Hayward’s TMT (Technology, Media & Telecoms) practice.

A survey of the UK’s fastest-growing privately held technology companies* has revealed that 40% felt that maintaining their sales growth during 2009 is the biggest issue they will face. This was followed by a quarter (26%) highlighting that recruitment and retention issues would be keeping their chiefs awake at night.

Paul Anthony, Head of TMT, at BDO Stoy Hayward Southampton, said: “In the current climate many would be surprised that access to credit and funding wasn’t the number one issue facing technology chiefs – as it’s certainly top of the agenda for a significant number of UK company heads.

“However, given the ambitious and entrepreneurial nature of the individuals behind these businesses – many of whom haven’t worked through a recession before – it isn’t surprising that sales growth comes so high up the agenda."

Carl Churchill, director of Murphx Innovative Solutions, based in Eastleigh and ranked 45th in Tech Track 100, commented: “We have seen on average annual sales growth at over 60% during the last three years. Maintaining this level of growth is a key focus for us going forward, it will be a challenge, particularly in the current environment, but were confident in our capability to succeed by capitalising on the opportunities an economic downturn presents us with.”

Trade Sales and IPOs

Trade Sales and IPOs featured on the agenda of 18% of technology companies, suggesting that the current market turmoil will create significant opportunities for those who are able to withstand the effects.

“There will be a wealth of opportunities out there for acquisitive businesses and these results suggest that we should expect to see significant levels of consolidation in the technology sector during 2009 and 2010. Those players who are presently more dominant in the market look set to become even stronger as a result of consolidation across the sector,” commented Anthony.

Credit Crunch?

Interestingly, the research identified that only 16% of the UK’s fastest-growing technology companies felt that the commercial downturn was the biggest issue they would face this year.

“We were staggered that so few felt that the financial crisis would be their biggest issue of 2009. This is undoubtedly a positive thing and perhaps suggests that the technology sector will be one of the success stories of 2009,” concluded Anthony.

Biggest issues facing the UK’s fastest-growing private technology companies

Ranking

Issue

1Sales growth

2 Recruitment

3 Trade sale or IPO

4 Commercial downturn

5= Organic Growth

5= Cashflow

7 Increase sales force

8= Repeat Business

8= Increase spend per customer

8= Achieve overseas growth

8= Launch new products