Financial factors

Financial factors

Despite talk of a slowdown in global economic growth, European SMEs are not worried about accessing fresh capital in the year ahead.

Clearwater International’s research shows that just 14% of firms are not seeking fresh investment in the coming 12 months, suggesting more than eight out of 10 firms are looking to grow.

When it comes to funding their business in the next 12 months, the most common approach among European firms is to seek further capital from investors or using cash flow surplus (both 37%). This is followed by raising additional capital through asset or working capital financing (35%).

In the UK, the most popular sources of finance are seeking further investment from existing investors (44%), using cash flow surplus (45%) and raising additional capital through asset or working capital financing (40%). The same proportion as average (14%) are not planning any investment.

How does the business plan to fund investment over the next 12 months?

Over half of the businesses surveyed in the Republic of Ireland are planning to seek further investment from existing investors (53.5%) and half (49%) plan to raise additional capital through asset or working capital financing. Some 43.5% are planning to use cash flow surplus and 16% are not planning any investment.

In France, three in 10 businesses say they are going to try raising additional capital through asset or working capital financing (34%). Nearly a third (31%) say they
will seek further investment from existing investors; followed by 30% that say they will use cash flow surplus or taking
out a business loan (29%).

Of the countries polled, German decision makers were most likely to say they are not planning any further investment (19% compared to 14% average). They are also more likely than average to say they will raise additional capital through asset or working capital financing (42% vs 35%).

Italian businesses were least likely to say they are not planning any further investment; just 7% compared to the 14% average.

Spain was roughly in line with the average responses, although looking for external equity investment was a similar proportion to the top three answers above.

Portugal does differ slightly in its top three financing methods: almost one in three (31%) are seeking further investment from existing investors, followed by those looking for external equity investment (30%) and using cash flow surplus (28%).

US-China trade war

Most of the European businesses surveyed are worried the US-China trade war will have an impact on their business.

Nearly one fifth (19%) say it won’t and a further 6% aren’t sure. The main concern is that the battle could slow global growth, rather than firms’ ability to trade with either party.

British and French businesses were the most likely to express concern over the trade war, although this is only a few percentage points above the average (78% vs 75%). Two in five French businesses said they expected a problem owing to the fact they traded directly with China.

Over half of the businesses surveyed in the Republic of Ireland are planning to seek further investment from existing investors (53.5%) and half (49%) plan to raise additional capital through asset or working capital financing. Some 43.5% are planning to use cash flow surplus and 16% are not planning any investment.

In France, three in 10 businesses say they are going to try raising additional capital through asset or working capital financing (34%). Nearly a third (31%) say they
will seek further investment from existing investors; followed by 30% that say they will use cash flow surplus or taking
out a business loan (29%).

Of the countries polled, German decision makers were most likely to say they are not planning any further investment (19% compared to 14% average). They are also more likely than average to say they will raise additional capital through asset or working capital financing (42% vs 35%).

Italian businesses were least likely to say they are not planning any further investment; just 7% compared to the 14% average.

Spain was roughly in line with the average responses, although looking for external equity investment was a similar proportion to the top three answers above.

Portugal does differ slightly in its top three financing methods: almost one in three (31%) are seeking further investment from existing investors, followed by those looking for external equity investment (30%) and using cash flow surplus (28%).

US-China trade war

Most of the European businesses surveyed are worried the US-China trade war will have an impact on their business.

Nearly one fifth (19%) say it won’t and a further 6% aren’t sure. The main concern is that the battle could slow global growth, rather than firms’ ability to trade with either party.

British and French businesses were the most likely to express concern over the trade war, although this is only a few percentage points above the average (78% vs 75%). Two in five French businesses said they expected a problem owing to the fact they traded directly with China.

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