Senior executives are optimistic about achieving their companies' growth expectations over the next two years, according to a survey by Ernst & Young LLP.
Ernst & Young’s Growth Company Leadership survey measures attitudes about key economic and performance indicators among US companies with $500 million to $3 billion in total revenues. Respondents were particularly optimistic about revenue, profitability, technology spending and hiring.
Three quarters of senior executives questioned said they believed their growth targets would be met, while almost two thirds (64%) expect their revenues to increase over the next twelve months by an average of 11.3 percent. Fifty-eight percent anticipate profit increases this year.
"Growth companies are regaining confidence that they can deliver on their potential and their promise to investors," said Maria Pinelli, Americas Director, Strategic Growth Markets, Ernst & Young LLP. "Their beliefs about hitting strong numbers are great news and a potential bellwether for the markets and the economy as a whole."
More than half (55%) of all respondents say domestic operations solely will drive revenue growth, with another 39% indicating a combination of domestic and international operations.
The industries that are most likely to expect growth in both revenue and profits, according to the survey, are technology (74% revenue and 72% profitability), financial services and retail/wholesale (both 69% revenue and 63% profitability). Financial services companies report the highest average revenue growth rate (13%).
Forty percent of executives surveyed anticipate an increase in hiring new employees over the next 12 months. Only 22% anticipate a decrease in hiring. Organic expansion of current operations is cited as the leading driver (64%) of growth, followed by new products or services (56%) and innovation of existing products and services (49%).
Six in ten respondents are comfortable spending/investing in the current economic environment in order to realize growth in their businesses. When it comes to capital spending, respondents expect five key investments to increase:
Technology (51%)
Employee training (34%)
Risk management (32%). The majority of financial service company respondents (54%) indicate an increase in spending on risk management.
Green initiatives (32%). More senior executives in the West (52%) see increased spending on green initiatives.
Research & development (30%).
The Ernst & Young Strategic Growth Markets Growth Company Leadership survey was conducted in April 2010 and represents responses from 349 senior-level executives at US public and private firms, across multiple industries, with $500 million to $3 billion in total revenue.
