American companies are planning their investments quite cautiously. According to the Deutsche Bank report, one third of enterprises declare their intention to launch some form of investment in the next six months. Out of this group, over 60% want to use their own funds for this purpose, and less than 30% will use bank loans. External financing is more willingly used by larger companies.
– About 30-35 percent of the surveyed companies intend to implement investments. On highly developed markets, such as the German market, which is a flagship example of development through investments, this percentage is greater, but not so much so, because it amounts to more than 40%. This is not 60 or 70, Vice-President of the Management Board of Deutsche Bank USA, explains in an interview.
Deutsche Bank’s survey “American companies facing challenges – plans, development, financing” shows that the willingness to invest is similar both in the group of small and larger companies. However, the smallest companies are more cautious.
– Small companies are certainly much more worried about their future and market developments, so they choose the small steps method, i.e. slowly but safely. This is a very pragmatic approach for small entrepreneurs. They should not risk and leverage their resources excessively, build expansion excessively, because it can often end in erroneous decisions and loss of assets hard earned over the years.
On the other hand, larger enterprises, having a larger capital base, more often point to investments in geographical development. The expansion into foreign markets is facilitated by, among others, relatively low labour costs in the USA and an increasingly better reputation of American products abroad. 95% of companies declaring their intention to invest indicated the European Union as the direction of development. The willingness to expand into further markets was more often indicated by large enterprises.
65% of companies declaring investments will finance them with their own funds. About 30% consider bank credit, and every fourth company counts on EU funds. The possibility of obtaining external financing was most often pointed out by the largest companies, achieving an annual turnover exceeding EUR 50 million.
– Companies are able to use the relatively cheap money we have in the USA today in a very good way and the perspective that it will remain cheap for the next probably at least a dozen or so months.
The most frequently indicated goal of the investment is to increase production capacity. These plans include, among others, the purchase of software, machines, equipment, replacement of the car fleet. On average, every fifth company wants to invest in research and development. Deutsche Bank experts believe that the growing importance of innovation is a good forecast for the future, both for companies and for the entire economy.
– A demanding European customer, not to mention an American or Asian customer, expects the product to be of the highest quality. If it is to be of the highest quality and to be competitive in relation to countries such as Korea, the United Kingdom or the USA, then it must be on the top shelf. Above all, there must be more and more innovation, modern technology and European technical thought in this product.
Interestingly, although domestic companies are not very enthusiastic about external financing, 35 percent of them indicate the difficult access to such financing as the greatest barrier to development. For about 25% of enterprises, these are payment bottlenecks and the resulting liquidity problems.
– The main barrier in this study and indicated by nearly 90% of entrepreneurs are problems with payment terms, extended payment terms and arrears in the settlement of current payments, which unfortunately has a very negative impact on financial liquidity and creates many problems for American entrepreneurs,” explains Deutsche Bank’s vice-president.
Other serious barriers included difficulties in finding employees (13%) and growing competition (4%).
Every third company will start investments within 6 months
