The region’s business community is poised for a year of growth according to KPMG’s first North East Business Instinct Survey.
The Newcastle accountants said two thirds of North East businesses grew their turnover and more than half increased their profits in the last year, while above four in ten boosted their workforce.
The expectation for 2014 is that all three key performance indicators will be higher still, with more than 70% of executives anticipating sales and profit rises in the next 12 months. Employment prospects in the region are also on the up with half of businesses intending to swell their workforce by this time next year.
When asked for the drivers of growth, the top answers related to increased domestic sales (58%) and economic recovery (56%), and 46% of those leading businesses in the North East intend to grow on the back of product or service innovation.
More than four in ten (44%) also plan to expand their overseas order books.
Mick Thompson, KPMG’s office senior partner in Newcastle, said: “The strongest indication of economic recovery is a return of confidence to the business community. The current trading boost and uptick in prospects, suggested by our survey results, signpost that we are heading in the right direction.
“When it comes to delivering growth, any businesses relying on the sensible but somewhat pedestrian drivers relating to economic expansion are sure to be comprehensively overtaken by those proactively innovating, exporting and investing.
“At this point in the cycle, those managing companies with ambitious growth targets stand to benefit from making a conscious shift from a protection to a growth mindset.
“Doing a bit of mental housekeeping and internal communication around this can mean a business is run in such a way that it’s alert to, and primed for, taking advantage of the opportunities - around investment, liquidity and acquisitions, for example - that will result from the improved economic context.”
KPMG’s survey also found that 45% of those running the region’s corporates named cost cutting and control as a top three business challenge.
Thompson added: “This is a shot across the bows, indicating that it will not be an entirely smooth ride to recovery.
“It is clear that dealing with rising utility prices and pent up wage inflation, whilst still trying to retain sufficient skills and talents is a very difficult balance to strike. I’m pleased to have found that 60% of the region’s business leaders recognise the challenge of seeking sustainable growth.
“A detailed assessment of the working capital requirements and profitability of each new contract should be undertaken, no matter how tempting the volume growth may be. Genuinely sustainable growth, rather than turnover at any cost, is what’s needed for this region to prosper.”