Global businesses expect high growth over the next twelve months, with internationalism and sustainability set to underpin their plans.
Majority of businesses view expanding into new markets as 2022 growth driver
Global business leaders are expecting double-digit revenue growth next year, offsetting damage from short-term supply chain disruption by pushing into new markets to reach more customers – and island businesses can both capitalise and support that shift, according to HSBC’s Head of Commercial Banking in the Channel Islands and Isle of Man.
New research from HSBC, ‘Navigator: Voice of Business’, polled over 7,350 business decision-makers from 14 global markets, and found that businesses are firmly back in growth mode despite concerns about sourcing and logistics, rising inflation and fresh waves of Covid-19 infections.
The majority (87%) of businesses view expanding into new markets as a growth driver for 2022. Conversely only a quarter of companies have increased their focus on domestic markets since the outbreak of Covid-19, despite lockdowns and challenges with cross-border trade.
Other key findings include:
- Optimistic outlook: Two thirds (66%) of businesses globally are optimistic about future growth over the next 12 months, while the majority (90%) expect overall sales to grow over the next year. Only 8% of businesses said they are more pessimistic about their future growth prospects than they were 12 months ago.
- High revenue growth expectations: Over half (56%) of businesses expect revenue growth of over 10%, while on average business leaders predict revenue growth of an impressive 19% over the next 12 months alone.
- International growth key for leading businesses: Those expecting revenue growth of 30% or more in the next 12 months (31% of businesses) list ‘expanding into new markets’ as the top priority to power this growth.
Aline Ayotte (pictured), Head of Commercial Banking at HSBC Channel Islands and Isle of Man, said: “Our findings show that global businesses are firmly back in growth mode – leaders are optimistic in their outlooks for the year ahead, and the majority are targeting high levels of growth set to push them beyond pre-pandemic levels.
“International expansion sits at the heart of this growth: businesses have resisted temptations to scale back their operations during the volatility and are increasingly recognising that taking a global view can push their business to new levels.
“As centres that are naturally outward looking, the Channel Islands and Isle of Man look well placed in this context, both in terms of pursuing their own international growth strategies and in supporting the global ambitions of others too.”
Despite a more positive outlook, the report also suggests that supply chain disruption this year has created challenges that businesses need to overcome. Seven in ten businesses (70%) expect supply chain disruption over the next 12 months. However, supply chain disruption remains of relatively low concern across the majority of global businesses, with only a quarter (23%) seeing it as a serious threat to business growth over the next 12 months. This compares to the resurgence of Covid-19, identified as a bigger threat to business growth plans (40% respondents), or rising inflation levels (34%).
Meanwhile, companies are also putting sustainability high on their agendas to improve revenue and build a more sustainable business. While two in five (39%) businesses have already set net zero targets in their own operations and across supply chains, a further 45% plan to within the next 12 months:
- On average businesses are planning to invest over 7% of their operating profits into increasing the sustainability of their operations in the next 12 months
- The majority (81%) predict an increase in revenue as a result of enhanced investment in their sustainability, with an expected average revenue increase of 11%
- A third (32%) are making their business more sustainability-driven or setting sustainability targets to protect their business against future challenges and shocks.
Aline added: “While it is encouraging to see greater confidence from businesses in their resilience to ongoing challenges, it is imperative they continue to innovate and channel resources in the right areas – and island businesses should absolutely be alive to this. That includes a continued focus on improving sustainability, supporting and growing the workforce, and embracing technology solutions to drive greater efficiencies.”
