Business Blunders - how to avoid them

To avoid a significant blunder in business planning, it is vital to continually appraise market forces and be aware of external influences that may have an effect on your business.

As business owners we continue to be challenged by economic austerity and economic influences, obstructing performance and results. Knowledge and awareness of markets and economic influences is crucial to managing risk, as well as the ability to realise new growth opportunities.

“I am not an economist to predict economic changes or emerging influences, but as an adviser to small and medium size business, it is essential for business owners to be aware of market forces that might impact investment, development and or, expansion”.

The government has 4 aims to help the economy to grow: 1.To create the most competitive tax system in the G20: 2. to make the UK the best place in Europe to start, finance and grow a business; 3. To encourage investment and exports as a route to a more balanced economy and 4. To create a more educated workforce that is the most flexible in Europe.*1

Plans to stimulate economic growth include: Increasing access to finance for business: The funding for a lending scheme: Offering strong incentives to banks and building societies to boost their lending.

Increasing the UK’s exports and supporting inward investment: Core to the Coast to Capital (Local Enterprise Partnership) Strategy.

Encouraging businesses to invest: A temporary increase in the annual investment allowance, encouraging small and medium-sized businesses to invest in plant and machinery.

Corporation Tax: In March 2013 the Chancellor announced that the rate of Corporation Tax will fall further to 20% in April 2015.

Supporting Local Growth: The creation of the Local Enterprise Partnerships.

Investing in Infrastructure: An increase of over £45 billion over the forward infrastructure investment pipeline in 2011.

“Whilst I am not giving a personal view point on the ‘plan for growth’, like yourselves, I am anxious to begin to see the effects of the economic policies for growth”*2

Yet key economic indicators continue to hinder the recovery of the British Economy:

• Rising unemployment

• Rising inflation

• Volatile markets

• A sky rocketing national debt, equivalent to 89% of the national economy*3

The challenges to the UK and global markets are more difficult than economists originally predicted.

On March 6 2013 the British Chambers of Commerce (BCC) published its Economic Forecast, downgrading its growth forecasts: from 1.0% to 0.6% in 2013, and from 1.8% to 1.7% in 2014*4.

With rising costs, the introduction of the employers new pension regulations and traditional methods of borrowing remaining at best difficult. We can expect more of the same from the UK economy for at least for the next 12 months.

So how do we ease the burden on business?

• Improve access to finance

• Increase the flow of credit

• Additional inward investment

• Support for capital investment

• The confidence for the creation of new jobs.

The Coast to Capital, Local Enterprise Partnership is committed to Internationalization,

Enterprise and Entrepreneurship although Advanced Manufacturing & Engineering must also play a vital role if the rigorous targets for international trade are to be achieved.

Despite the pressures arising from the ‘Economic Challenge’ I continue to see winning performers. Businesses that remain focused who continue to innovate, meet the needs of their customers, understand their markets and respond to external influences are proving to surpass their growth targets.

Performing sectors to name a few, include the: Creative Industries, Age & Care, Information & Communications, Biotechnologies, ICTs & On-Line sales companies. In the last quarter the Service Sector, accounting for three quarters of the UKs economic activity*5 outperformed forecasts, with some economists suggesting this performance was due to the 2012 Olympic Games?

The fact is small and medium size businesses are the critical life line to the UK economy, providing 60% of our jobs and contributing over 50% of UK GDP*6, making it more vital for government to create an environment for SMEs to grow, if the UK economy is to recover quickly.

The government’s Plan for Growth is an urgent call for action supporting key performing sectors.The document can be down loaded at: http://www.hmtreasury.gov.uk/ukecon_growth_index.htm

Here are my “top tips” to help maximise performance in 2013:

• Understand your customer base and competitive advantage to direct your sales and marketing

• Review your products and services.

• Research and sell into new markets.

• Be realistic in your planning and manage your cash flow.

• Consistently review your costs and overheads.

• Review and understand what your management information is telling you!

• Evaluate your margins and ‘Think Profit’

• Look for hidden opportunities whilst managing the risks.

• Continue to Innovate, no mater how small the improvement or idea might be.

Whilst there is no denying the future does indeed hold uncertainty and concern. By meeting the challenges head on and responding to external influences that continue to challenge our ability to enjoy the growth, we can overcome current difficulties and re-establish our place as market leaders.

Sources:*1 www.gov.uk*2 Policy for economic growth*3 The Daily Mail on line *4 www.britishchambers.org.uk*5 www.bbc.co.uk/news *6 www.fsb.org.uk/business-issues/home