Better climate for growth

Entrepreneurial Growth Monitor

The findings of the very first Entrepreneurial Growth Monitor are clear: overall, the climate for expanding, buying or selling a company is better now than it was a year ago. Vlerick Professor Hans Crijns and Marc Cosaert (EY partner) are now planning to repeat this survey annually to get a feel for what’s on the minds of Flemish entrepreneurs.

A total of 97 entrepreneurs and 65 experts (including bankers, insurers, investors and consultants) took part in the survey. The Entrepreneurial Growth Monitor (EGMO) was organised in June and compares the findings from the previous 12 months with expectations for the coming 12 months. The answer to each question is incorporated into a trend indicator, representing a number that shows trends over a given period at a glance.

Quite positive

Generally speaking, the respondents are quite positive about the prospect of expanding a company. Expectations of expanding a company and selling a company are much better than during the period June 2013-June 2014. The growth potential is mainly in the European and global markets.

Professor Hans Crijns: “It’s striking to note the difference between the entrepreneurs’ proactive, offensive measures and the reactive, defensive measures that the experts put forward. As with the contradiction between focus and risk spread, it’s about a creative tension and striking the right balance.

Figure 1. Trend indicators of general business climate

Competitiveness and financing

When asked about the level of competitiveness, entrepreneurs and experts shared the same expectations: the downward tendency will continue. As for financing opportunities, the trend is unanimously positive: respondents expect that there will be sufficient private equity available, while bank loan costs will remain unchanged.

Because of that plentiful supply, capital is also cheap, though people are now managing it more carefully,” says Marc Cosaert. “The economic crisis in the past few years means that investors now look at opportunities with a more critical eye. At EY, we handle numerous investment capital applications from start-ups, but especially from companies seeking to grow. We used to approve perhaps 40% of the applications; now it’s only 20%. This means the projects that make it through are the strongest candidates.

Six EY tips for successful growth

EY has become more discriminating when considering applications from companies seeking to grow. Marc Cosaert identifies six criteria that make all the difference.

  1. Commitment
  2. Sharp focus
  3. Significant market share in a segment or niche segment
  4. A strategically sound plan
  5. Strong IT support
  6. Realistic assessment of risks and opportunities

To do or not to do?

Entrepreneurs: what to do

Experts: what not to do

1. develop cost-saving innovations

1. alter strategy

2. launch new products more quickly

2. postpone planned investments

3. increase own capital

3. scrap planned recruitments

Download the full results of the Entrepreneurial Growth Monitor (in Dutch).

& Rankings

Equis Association of MBAs AACSB Financial Times